{"id":873881,"date":"2026-09-04T14:06:22","date_gmt":"2026-09-04T12:06:22","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=873881"},"modified":"2026-09-04T14:08:22","modified_gmt":"2026-09-04T12:08:22","slug":"south-africa-bracing-for-bad-news-next-week","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/873881\/south-africa-bracing-for-bad-news-next-week\/","title":{"rendered":"South Africa bracing for bad news next week"},"content":{"rendered":"\n

Economists expect South Africa to record a quarterly decline in gross domestic product next week, with fixed investment set to recede for a second consecutive quarter. <\/p>\n\n\n\n

Stats SA will publish South Africa’s GDP numbers for the second quarter of the year next Tuesday (8 September), with the outlook tilted to the downside. <\/p>\n\n\n\n

According to economists at Nedbank, South Africa’s real GDP growth likely weakened from 0.5% qoq in Q1 2026 to a contraction of around 0.2% qoq in Q2.<\/p>\n\n\n\n

The banking group noted that high-frequency indicators point to weakness in mining, manufacturing, electricity, gas, and water, as well as domestic trade. <\/p>\n\n\n\n

While agriculture and parts of the services sector likely remained supportive of growth, these gains would probably be insufficient to offset broader weakness elsewhere in the economy, it said.<\/p>\n\n\n\n

These weaknesses would be particularly pronounced in sectors like construction, which are dependent on fixed investment to spur growth.<\/p>\n\n\n\n

The construction industry\u2019s contribution to South Africa\u2019s economy almost halved to 2.3% of value added in 2025 from 4.2% in 2008, according to Statistics South Africa.<\/p>\n\n\n\n

Investment has remained a key weakness in the government\u2019s efforts to boost South Africa’s economic growth, with the country failing to achieve an annual average GDP growth of 1% over the past decade.<\/p>\n\n\n\n

With investment forecast to decline by 0.7% next quarter, these pressures will likely persist.<\/p>\n\n\n\n

The group expects investment to have receded by 0.7% in Q2. If the forecast is correct, fixed investment would be recording its second consecutive quarter of decline.<\/p>\n\n\n\n

Fixed investment, or gross fixed capital formation (GFCF), declined by 1.1% in the first quarter of the year.<\/p>\n\n\n\n

GFCF is a measure of the net addition of fixed assets, such as buildings, machinery, and infrastructure, in an economy and indicates investment trends.<\/p>\n\n\n\n

Nedbank said that private-sector investment disappointed in Q1 and will likely disappoint again in Q2.<\/p>\n\n\n\n

However, easing structural constraints, reduced risk premiums and continued investment in renewable energy should help lift outlays modestly above 2025’s even lower levels. <\/p>\n\n\n\n

“Public sector investment has also started to recover from a low base and is likely to provide additional support,” it said.<\/p>\n\n\n\n

“While these developments are unlikely to trigger a sharp turnaround in the sector, they should help support construction activity and moderate the pace of contraction.”<\/p>\n\n\n\n

The banking group said that risks to the fixed investment outlook are still tilted to the downside.<\/p>\n\n\n\n

Heightened geopolitical tensions, higher oil prices and weaker global growth could prompt businesses to delay or scale back investment plans, it said.<\/p>\n\n\n\n

“Domestic constraints, including criminality and disruptions within the construction sector, present additional headwinds,” it added.<\/p>\n\n\n\n

\"\"<\/a>
GFCF Q1 2026<\/figcaption><\/figure>\n\n\n\n

Ramaphosa’s promises<\/h2>\n\n\n\n

President Cyril Ramaphosa has promised to unleash investment opportunities in South Africa, setting an ambitious economic growth target of 3%.<\/p>\n\n\n\n

But to accomplish this, gross fixed capital formation needs to reach about 30% of GDP by 2030\u2014a far stretch from the approximately 14% it currently covers.<\/p>\n\n\n\n

The government is looking to improve the credibility of the infrastructure pipeline by focusing on project preparation and financing rather than simply identifying potential projects.<\/p>\n\n\n\n

The state\u2019s latest construction book, which lists the project pipeline, includes more than 170 projects.<\/p>\n\n\n\n

Of those, 55 with an estimated value of more than R407 billion are under construction, while 32 worth about R48 billion have been completed.<\/p>\n\n\n\n

Ramaphosa has long promised to\u00a0turn South Africa into a construction site<\/strong><\/a>, having allocated R1.07 trillion toward the buildout over the next three fiscal years in the 2026 budget.<\/p>\n\n\n\n

However, Nedbank\u2019s capital expenditure project listing for the first half of 2026 showed that the country has seen the value of announced investment projects plummet by 81%\u2014or R580 billion\u2014from 2025.<\/p>\n\n\n\n

This is the lowest amount since 2017.<\/p>\n\n\n\n

With the GDP figures coming next week, the bank expects South Africa to only marginally improve its 2025 GDP growth in 2026.<\/p>\n\n\n\n

The economists expect a full-year GDP reading of 1.2%, up 0.1 pp from 1.1% in 2025, with GDP averaging only 1.7% over the next three years. <\/p>\n\n\n\n

“We expect a moderate recovery over the next three years…however, US trade policy and the war in Iran pose significant downside risks,” the bank said.<\/p>\n\n\n\n

“South Africa’s ability to cope with these headwinds depends on faster progress with reforms in the energy, logistics and water sectors.”<\/p>\n","protected":false},"excerpt":{"rendered":"

Economists expect South Africa to record a quarterly decline in gross domestic product next week, with fixed investment seen receding for a second consecutive quarter. <\/p>\n","protected":false},"author":10,"featured_media":872112,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"posted","_sma_x_autopost_error":"","_sma_x_post_id":"2095846099269337337","_sma_facebook_post_id":"191437357620492_2195677364585996","_sma_instagram_post_id":"18111976163104007","_sma_x_attempts":1,"footnotes":""},"categories":[11121],"tags":[1293,2720,543,1799,1809],"class_list":["post-873881","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-cyril-ramaphosa","tag-gdp","tag-investment","tag-nedbank","tag-stats-sa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/873881","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=873881"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/873881\/revisions"}],"predecessor-version":[{"id":873908,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/873881\/revisions\/873908"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/872112"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=873881"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=873881"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=873881"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}