By Lehlohonolo Lehana.
The International Monetary Fund headquarters in Washington. Image: Andrew Harrer.
The International Monetary Fund (IMF) has marginally raised its forecast for South African economic growth for 2026 in its January World Economic Outlook (WEO).
The IMF forecasts South Africa’s economy to grow by 1.4% in 2026, edging up slightly to 1.5% in 2027.
While this represents a modest 0.2 percentage points upward revision from earlier projections of 1.2%, it remains well below both the sub-Saharan African average and the level of growth needed to make meaningful progress in tackling unemployment, poverty and inequality.
The IMF update for South Africa is in line with projections released by the World Bank in its January ‘Global Economic Prospects’ report, as well as the IMF’s small upward revision for global growth.
The World Bank last week lifted its 2026 projection for South African gross domestic product (GDP) growth by 0.3 percentage points to 1.4%, and to then rise marginally to 1.5% next year.
“Continued reform momentum – particularly in energy and logistics – alongside rising public investment is expected to crowd in private investment and support medium-term growth prospects,” the World Bank said.
The IMF expects the global economy to expand by 3.3% in 2026, also a 0.2 percentage point upward revision relative to its October report. It has sustained its 3.2% projection for world growth in 2027.
Global headline inflation, meanwhile, is expected to decline from an estimated 4.1% in 2025 to 3.8% in 2026 and further to 3.4% in 2027.
“This steady performance on the surface results from the balancing of divergent forces,” the report states.
The WEO Update also warned that any reevaluation of productivity growth expectations about AI could lead to a decline in investment and trigger an abrupt financial market correction, spreading from AI-linked companies to other segments and eroding household wealth.
South Africa is expected showcase its improving economic position reflected in strengthening investor confidence in Davos. Key recent developments include the stabilisation of electricity supply, removal from the Financial Action Task Force’s (FATF) greylist, and an upgrade of the sovereign credit rating by the rating agency S&P Global.
Team South Africa’s mission to Davos is headed by Finance Minister Enoch Godongwana.
“The team will highlight progress on structural reforms across energy, logistics, water, digital communications and small business sectors, among others. The delegation’s strategic intent is to position South Africa as an attractive investment destination.”
This is Team SA’s annual remit in Davos – to boldly go into the snow in a bid to melt icy perceptions that global investors hold regarding South Africa. And some progress has clearly been made, and the IMF and World Bank growth upgrades – part of their wider global outlooks – reflect that.