After starting the year with a much more positive outlook for South Africa’s economy, the International Monetary Fund says the picture has dimmed significantly since then.<\/p>\n\n\n\n
The IMF’s latest World Economic Outlook report for October\u2014the final report for the year\u2014has slashed South Africa’s GDP forecast to just 1.0% for the year.<\/p>\n\n\n\n
This reflects significant ups and downs in the outlook as disruptions from the United States’ war in Iran reverberated through the global economy.<\/p>\n\n\n\n
Prior to the outbreak of the conflict at the end of February 2026, the IMF had forecast South Africa’s GDP growth at 1.4% for 2026. <\/p>\n\n\n\n
In its April outlook, following the war, this was cut down to 1.0%.<\/p>\n\n\n\n
The forecast shifted at the time of the July 2026 outlook, where a ceasefire was being negotiated, and a memorandum of understanding had been signed, lifting South Africa’s growth prospects slightly to 1.1%.<\/p>\n\n\n\n
However, this has now been undone, with the collapse of peace talks and escalation of attacks and sanctions in the Middle East again driving energy markets into chaos.<\/p>\n\n\n\n
As a result, South Africa’s growth forecast has tracked the global sentiment lower, back to its low point of 1.0% for this year.<\/p>\n\n\n\n
While the cut from the July outlook is relatively minor, it reflects the entrenched damage caused by the war.<\/p>\n\n\n\n
The latest forecast is also below the Bloomberg consensus of economists, which most recently revised its GDP forecast for the year down to 1.1% y\/y from 1.2% y\/y.<\/p>\n\n\n\n
This poses a significant hurdle for the South African government, which has been pushing for 3% growth to address the country’s job crisis, where it sits with an unemployment rate of 33.6%.<\/p>\n\n\n\n
South Africa needs to sustain growth above 3% to make any meaningful impact on the number.<\/p>\n\n\n\n According to the IMF, while suffering from the global impact of the war, South Africa’s growth prospects beyond 2026 are relatively flat.<\/p>\n\n\n\n “South Africa\u2019s growth outlook is expected to remain stable in the near term and improve gradually over the medium term,” it said.<\/p>\n\n\n\n This will be underpinned by strengthened policy frameworks and ongoing structural reforms, it added.<\/p>\n\n\n\n To this point, South Africa’s economy was headed in a very positive direction before the Iran War upended global energy markets.<\/p>\n\n\n\n Should conditions normalise, the trajectory can be found once again. But the marks of war are still being felt.<\/p>\n\n\n\n Global growth is projected to decelerate from 3.5% in 2025 to 3.1% in 2026, then recover to 3.4% in 2027. Like with South Africa’s forecast, this is in line with the April update.<\/p>\n\n\n\n The IMF said its modelling assumes the Strait of Hormuz will reopen in March 2027, with a return to prewar conditions by October 2027. <\/p>\n\n\n\n “This assumption implies a gradual restoration of production, shipping, insurance, and payment arrangements rather than immediate normalisation of energy flows,” it said.<\/p>\n\n\n\n It also assumes that severe shortages would generally be avoided through further inventory drawdowns, expanded use of alternative routes, and some additional supply from producers outside the conflict zone.<\/p>\n\n\n\n However, shortages are assumed to arise in some emerging market and developing economies that do not have stocks available and encounter strong competition from wealthier counterparts for available cargoes.<\/p>\n\n\n\n Unfortunately for South Africa, as a net fuel importer, this may mean a tough 12 months ahead in terms of energy prices.<\/p>\n\n\n\n More broadly, the IMF warned that policy and geopolitical uncertainty are assumed to remain elevated through 2027.<\/p>\n\n\n\n South Africa’s economy is expected to grow 1.3% in 2027.<\/p>\n","protected":false},"excerpt":{"rendered":" After starting the year with a much more positive outlook for the economy, the IMF says the picture for South Africa has dimmed significantly since then.<\/p>\n","protected":false},"author":10,"featured_media":848397,"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":"2109962365974278251","_sma_facebook_post_id":"191437357620492_2235733103913755","_sma_instagram_post_id":"18101707826048187","_sma_x_attempts":1,"footnotes":""},"categories":[11121],"tags":[2720,755,2722],"class_list":["post-879585","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-gdp","tag-growth","tag-imf"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/879585","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=879585"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/879585\/revisions"}],"predecessor-version":[{"id":879589,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/879585\/revisions\/879589"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/848397"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=879585"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=879585"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=879585"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Outlook<\/th> 2026 Forecast<\/th> Change (%pt)<\/th><\/tr><\/thead> January 2025<\/td> 1.6%<\/td> –<\/td><\/tr> April 2025<\/td> 1.3%<\/td> -0.3<\/mark><\/td><\/tr> July 2025<\/td> 1.3%<\/td> 0.0<\/td><\/tr> October 2025<\/td> 1.2%<\/td> -0.1<\/mark><\/td><\/tr> January 2026<\/td> 1.4%<\/td> +0.2<\/mark><\/td><\/tr> April 2026<\/td> 1.0%<\/td> -0.1<\/mark><\/td><\/tr> July 2026<\/td> 1.1%<\/td> +0.1<\/mark><\/td><\/tr> October 2026 (latest)<\/strong><\/td> 1.0%<\/mark><\/strong><\/td> -0.1<\/strong><\/mark><\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n\n\n\n