CAPE TOWN, Feb. 25 (Xinhua) -- South Africa's economy is projected to grow by 1.6 percent in 2026, with the outlook steadily improving, Finance Minister Enoch Godongwana said on Wednesday.
Godongwana made the remarks while delivering the 2026 Budget Speech in Cape Town, outlining the government's fiscal strategy and economic reform agenda.
"On the domestic front, our growth outlook is steadily improving. We project real economic growth of 1.6 percent in 2026, an improvement from the 1.4 percent estimated in 2025," he said. Over the medium term, growth is expected to average 1.8 percent, reaching 2 percent by 2028.
He noted that persistent logistics bottlenecks, weak public infrastructure, and a recent outbreak of foot-and-mouth disease continue to weigh on economic activity, adding that "rapid inclusive growth remains our only durable path forward."
According to the minister, efforts to promote faster economic growth revolve around four pillars: maintaining macroeconomic stability, implementing structural reforms, investing in growth-enhancing infrastructure, and building state capacity.
"These pillars are the foundation upon which inclusivity is built, and how we ensure that growth is faster," he said.
On fiscal policy, Godongwana said South Africa has reached "an important turning point in the management of our public finances." The consolidated budget deficit is projected to narrow to 4 percent of gross domestic product (GDP) in 2026/27, while gross debt is expected to stabilize at 78.9 percent of GDP in 2025/26 before declining over the medium term.
Stronger-than-expected revenue collection allowed the government to withdraw 20 billion rand (about 1.26 billion U.S. dollars) in previously proposed tax increases, the minister announced.
The budget also introduces the Targeted and Responsible Savings program, through which 12 billion rand in savings have been identified over the medium term. "Targeted and responsible savings are not a once-off initiative," Godongwana said, adding that the approach would be entrenched in future budget processes.
Infrastructure investment remains a central component of the government's growth strategy, he stressed. Public-sector spending on infrastructure is expected to exceed 1 trillion rand over the medium term, including allocations for transport and logistics, rail modernization, energy transmission, and water infrastructure.
The minister linked fiscal sustainability to national resilience. "With the health of our public finances comes a greater degree of economic freedom and sovereignty," Godongwana said, adding that such sovereignty "gradually frees us from over-reliance on external debt" and shields the country from global uncertainties.
