South Africa’s economy is expected to expand by 1,2% in 2026, with growth momentum expected to strengthen thanks to resilient consumer demand and infrastructure investment.
This is according to the Economic Outlook 2026 released by the Mastercard Economics Institute (MEI), which examines how global policy changes which grabbed headlines in 2025 will continue to influence economies around the world throughout 2026.
South Africa’s growth compares with projected GDP growth of 4,4% across sub-Saharan Africa and global growth of 3,1%.
Inflation pressures across the Africa are forecast to moderate, aided by a weaker US dollar and lower energy prices, allowing room for central banks to reduce interest rates.
In South Africa, consumer purchasing power is likely to improve as wage growth continues to outpace inflation, encouraging discretionary spending.
The reports also finds that, while the global economy becomes more fragmented, growing AI adoption presents new opportunities.
“As we look to 2026, South Africa’s economic outlook shows encouraging signs as supportive financial conditions and improving household incomes boost consumption,” says Khatija Haque, chief economist: EEMEA at Mastercard Economics Institute. “Disinflation, investments in strategic sectors and a flourishing digital economy are expected to underpin growth, even as global trade pressures and structural constraints continue to pose risks.”
Gabriel Swanepoel, country manager: southern Africa at Mastercard, adds: “Macro indicators point to early signs of improvement in purchasing power, as inflation slows and wage growth outpaces price increases. As digital innovation accelerates and investment strengthens key sectors of the economy, we see potential for more resilient and inclusive growth in 2026.”
Key findings from the report include:
- Consumer spending drives recovery – Lower interest rates and improving real incomes are expected to support renewed consumer activity. Mastercard data shows that South African households are increasingly prioritising lifestyle and experience-led spending as budget pressures ease.
- Diversifying trade with emerging markets – South Africa is increasing trade with emerging markets, as supply chains evolve and new trade corridors deepen ties with Asia and the Middle East. Chinese mainland’s removal of import duties on most African goods provides new opportunities for exporters, particularly in sectors exposed to US tariff measures.
- Digital transformation and fiscal expansion among main tailwinds – The MEI identifies digital transformation, particularly deeper AI integration, as a key macro trend likely to boost productivity and economic growth. The MEI AI Enthusiasm Index ranks countries according to their spending on AI service providers, AI’s share of total software spending and per-capita spend on AI tools. The index places South Africa at early-stage adoption, with scope for further growth as AI usage expands across the economy. The MEI also highlights long-term infrastructure development and strategic investment as key tailwinds that can strengthen domestic capabilities and help firms adapt to shifting global dynamics.
- SMEs remain vital to the continent’s economy – In South Africa, SMEs account for 21% of retail spending and the share of ecommerce spending at SMEs has grown year-on-year. Digital tools are enabling small businesses to streamline operations, reduce costs and compete more effectively. MEI sees an opportunity for SMEs to continue to gain share in tech-driven services. There is a growing demand for local tech solutions and a more specialised offering. To succeed, SMEs require strategic agility and digital readiness. Those that are the most flexible and tech forward are likely to be best positioned to accelerate growth.
Consumers worldwide will remain savvy, focusing on international, tech-enabled and value-conscious spending. They will continue to prioritise meaningful moments, such as travel and live events, while remaining price-sensitive for many necessary goods.