Economists cut SA growth in April and raised inflation forecasts due to the Middle East conflict.
The latest results of the Bureau of Market Research (BMR)/Unisa Economist of the Year (EOY) competition point to a more uncertain and fragile economic outlook for both South Africa and the global economy.
This cut was the second consecutive decline. The consensus forecast for economic growth to 2026 in April is 1.3%, up from 1.5% in March and 1.6% in February. This is significantly higher than the International Monetary Fund (IMF) forecast of 1.0%. IMF cut it forecast From 1.4% made in January.
This was followed by a 0.4% increase in 2024 followed by a 1.4% increase in 2025. It is measured from the expenditure side. This measure is what most economists, including the National Treasury, use when making their forecasts.
The BMR/Unisa Economist of the Year competition brings together leading economists to provide independent forecasts on key economic indicators. A total of 43 economists are participating in the 2026 competition.
different views
Although there is broad consensus by participating economists on the overall direction of the economy, differences remain regarding the impact of high inflation on domestic consumption and the fixed investment outlook.
Participants stressed that the economic outlook is highly dependent on how geopolitical tensions evolve in the coming months.
Even if such tensions subside in the short term, their direct, indirect and induced impacts are expected to persist for some time in the global economy.
downside risk
Downside risks to the outlook now appear more prominent than upside surprises.
Most economists expect the South African Reserve Bank to raise the repo rate on 28 May. This would be in response to high inflation.
according to Statistics South AfricaConsumer inflation rose year-on-year to 4.0% in April, up from 3.1% in March and 3.0% in February. The average growth for the first four months was 3.4%.
The consensus forecast for the average inflation rate in 2026 has also increased. It has increased from 3.6% in March and 3.4% in February to 3.9% now.
domestic consumption
Some economists expect household finances to strengthen, leading to real household consumption expenditure growth of more than 2%. Others remain cautious, citing high unemployment, tough credit conditions and ongoing political and policy uncertainty.
The South African Reserve Bank reported that the ratio of net assets to disposable income was expected to increase from 398% in 2024 to 425% in 2025. As South Africans become wealthier in 2025, they can afford more. Therefore, real household final consumption expenditure grew by only 1.0% in 2024 to 3.6% in 2025.
fixed investment
Views also differ on fixed investments. More optimistic forecasts anticipate improved private sector participation and increased confidence, as well as gradual progress in structural reforms in transport, water and energy.
This is reflected in a surge in solar energy production. The National Energy Regulator of South Africa (NERSA) registered 112 generation facilities in the first quarter of 2026. They have a combined capacity of 1 327 MW at an estimated investment value of R28.2 billion.
In March National Treasury launched a R54 billion performance-based grant. It aims to increase investment in water, sanitation, power and waste infrastructure services by the country's eight metropolitan municipalities or metros.
A more cautious approach highlights risks associated with uncertainty over policy direction, governance concerns, biosecurity challenges in agriculture and domestic political developments, including local government elections. This is reflected in the fact that economists have cut SA growth forecasts.
“There are encouraging signs of structural improvement at the local level, but high oil prices, inflation risks and weak global growth are expected to continue to hamper the economic recovery through 2026,” said Jacqueline Meiring, member of the EOY Adjudication Committee.