Economic Outlook for 2026
The global economy is expected to experience moderate growth in 2026, with various regions and countries facing unique challenges and opportunities. According to the Reuters Econometer, South Africa’s economy is projected to grow moderately, with GDP expected to increase from 1.2% in 2025 to 1.5% in 2026.
South Africa’s Economic Growth
This moderate improvement is attributed to easing monetary policy, progress in reforms to improve electricity availability, and the reduction of logistics bottlenecks, which will support investment and consumption. However, political risk is rising ahead of the 2026 local government elections, with voter sentiment sensitive to poor service delivery outcomes and economic conditions. Potential shifts in municipal control could affect policy continuity, particularly in areas responsible for utilities and infrastructure, adding uncertainty for investment and local governance.
Inflation and Interest Rates
The consensus view on inflation is that headline inflation is expected to rise from 3.3% in 2025 to 3.6% in 2026, partly due to base effects, before easing to 3.4% in 2027. Interest rate decisions by the SA Reserve Bank (SARB) are scheduled throughout the year, including late January, March, May, July, September, and November 2026.
Global Economic Outlook
The United States economy is described as having proved resilient through 2025, supported by strong AI-driven investment, solid household consumption, and fiscal stimulus. The Bloomberg median consensus expects growth to stabilize at 2% in 2026. Europe is facing moderation, with the Bloomberg consensus expecting growth to moderate from around 1.4% in 2025 to 1.1% in 2026. In the UK, economic activity is set to remain subdued, with GDP growth expected to fall from an expected 1.4% in 2025 to 1.1% in 2026.
Emerging Markets and Global Events
Japan’s strong expansion in 2025 is set to halve, with GDP growth easing to 0.7% in 2026. The Bank of Japan is expected to raise its policy rate gradually toward 1% by the end of 2026. Globally, the Bloomberg consensus expects growth to hold steady at 4.1% in 2026, with South Asia again being the strongest performer, supported by India’s resilient consumption and investment. China’s post-pandemic rebound is flattening out, with growth forecast to ease to 4.5% in 2026.
Upcoming Global Events
A significant preliminary global event scheduled is the "COP31" conference, set for November 9-20, 2026. The year 2026 also includes several major elections, such as the "Uganda presidential election" in January, the "Peruvian presidential election" in April, and the "United States midterm election" in November.
Conclusion
In conclusion, the global economy is expected to experience moderate growth in 2026, with various regions and countries facing unique challenges and opportunities. It is essential to keep a close eye on the upcoming global events, interest rate decisions, and economic forecasts to navigate the complex economic landscape of 2026.
