South Africa’s economic activity slowed further in June 2026, with the PayInc Economic Index declining by 0,9% on a monthly basis, following a revised 2% decline in May.
“At 102.4, the PayInc Economic Index reached its lowest level since November 2025, although it remained 2.5% higher than a year earlier,” says Shergeran Naidoo, head of stakeholder engagement at PayInc.
The first half of 2026 reflected a strong first quarter followed by a notable moderation in economic activity during the second quarter, particularly over the past two months.
“While the signing of a peace framework between the United States and Iran in June has helped ease some global tensions, uncertainty continues to weigh on business and consumer confidence,” says independent economist Elize Kruger. “As such, many remain cautious, delaying spending and investment decisions. This is reflected in the softer economic activity recorded during the second quarter.”
The PayInc Economic Index measures the real value of all electronic transactions cleared through PayInc, together with a wholesale cash component.
“Despite both the volume and value of electronic transactions recovering moderately during June, the index was weighed down by higher inflation, mostly driven by elevated fuel prices,” says Kruger.
Following the outbreak of conflict in the Middle East, households and businesses have faced sustained pressure from elevated fuel prices and higher interest rates. While oil prices have eased to around $72/bbl, daily over-recoveries at the pump have narrowed to below R1/litre for both petrol and diesel.
“This suggests that any fuel price reduction in early August may be limited, unless the rand strengthens further or oil prices decline more meaningfully during the month. Together with weaker confidence, these pressures are likely to weigh on economic activity in the months ahead,” says Kruger.
June’s economic indicators showed a mixed picture. The S&P Global South Africa PMI improved slightly to 50.5, signalling modest expansion, while Naamsa reported strong vehicle sales growth of 15,3% year-on-year. In contrast, the Absa PMI declined to 47.3, reflecting continued weakness in domestic demand.
Despite the softer economic environment, payment activity remained resilient.
A total of 186.8 million transactions were processed through PayInc during June, up 11,6% compared to a year earlier, while the nominal value of electronic transactions increased from R1,369-trillion in May to R1,427-trillion, according to Naidoo.
For the first half of 2026, transaction volumes increased by 11,2% compared to the same period last year, reinforcing the continued shift towards electronic payments.
“The continued growth in digital payments demonstrates that consumers and businesses increasingly rely on electronic transactions for their everyday payment needs, even during periods of economic uncertainty,” says Naidoo. “While traditional EFT payment streams continue to grow steadily, DebiCheck and PayShap are gaining momentum, reflecting the ongoing evolution of South Africa’s payments landscape.”
Economic activity over the first six months of 2026 reflects the economy’s fragility.
“The second quarter has demonstrated just how quickly confidence can shift in response to global and domestic developments. While electronic payments activity remains resilient, the broader economic picture suggests that growth is likely to remain subdued until inflationary pressures ease and confidence returns meaningfully,” concludes Kruger.