South Africa’s latest fiscal projections show a fragile but improving growth path over the medium term. The Medium-Term Budget Policy Statement, presented earlier this afternoon, forecasts real GDP growth of 1.2% in 2025, rising to 1.5% in 2026, 1.8% in 2027, and 2.0% in 2028.

The finance minister, Enoch Godongwana, remarked on those numbers saying: “The growth outlook strengthens moderately over the medium term…the structural reforms we have embarked on, particularly in energy and logistics, will be key to lifting our rate of growth closer to levels demanded by our developmental needs.”

Household consumption, which grew 1.0% in 2024, is expected to expand by 2.6% in 2025, and settle near 2.2% by 2028. The rate of increase in gross fixed-capital formation, a key measure of private and public investment, is set to turn positive after a prolonged contraction, moving from –1.0% in 2025 to 2.6% in 2026 and nearly 4% by 2028.

The documents accompanying the finance minister’s speech show inflation holding near the Reserve Bank’s new target of 3%, easing from 4.4% in 2024 to 3.2% by 2028. Nominal GDP is projected to grow from R7.66 trillion in 2025 to just under R8.96 trillion by 2028.

The Treasury notes, however, that the current-account balance will remain in deficit - widening from –1.0% of GDP in 2025 to –2.0% by 2028, as import demand outpaces export growth.

The data suggests that while South Africa’s growth outlook has stabilised, sustained reform and higher investment will be required to lift the economy.