South Africans have grown cautious about positive news after years of national setbacks. Yet beneath this understandable scepticism, the data tells a different story. Despite many challenges, the country closed 2025 on several high notes. These include improved sovereign credit ratings, removal from the Financial Action Task Force (FATF) greylist, record performance on the JSE all share index, and a recovery of the rand. Together, these developments set a more hopeful tone for the year ahead.
A significant achievement is how South Africa held a successful G20, which inspired global confidence in Africa and empowered the Global South. Resolutions in the November sessions prioritised a critical concern for developing economies: addressing unfavourable debt structures and improving credit access and structuring to nations. This marks a pivotal point in improving financial stability on the continent as we begin 2026. On a more sentimental note, the G20 proved to South Africans that we have the capacity for good governance, which may put pressure on the will of our leaders in the year ahead.
GNU litmus test
One could say that political will is going to be tested in 2026 as we head to the local government elections later in the year. It is the first opportunity for the GNU partners to truly see who has benefited (the most) from collaborating. The year is threatened by prospects of political instability and social unrest. The GNU needs to perform nationally while partners compete against each other in regional campaigns.
On the fiscal front, healthy collaboration between the public and the private sector has allowed Operation Vulindlela to continue to make positive strides, particularly around infrastructure, a key enabler to business. There are signs that public investment will be a key driver of economic activity in the year ahead: capital expenditure on construction works grew exponentially in Q3 2025, as evidenced by Stats SA data, and confidence in civil construction spiked in Q4, according to the latest survey in the sector by the Bureau for Economic Research.
Recent environmental disasters have worked to elevate the urgency of the country’s infrastructure backlog and maintenance — we need to work against nature’s clock to succeed. While the construction sector recovers, its ability to create the employment opportunities it did in the past remains in question.
This year, 2026, marks the first year of the implementation of a new monetary policy framework, with the South African Reserve Bank having set the new inflation target at 3%.
This year, 2026, marks the first year of the implementation of a new monetary policy framework, with the South African Reserve Bank having set the new inflation target at 3%. The change is contributory to a lower inflation outlook for this year going into 2028, with the potential to ease the cost-of-living crisis faced by the majority of households. Combined with the downcycle in interest rates, the consumer outlook is favourable this year and is likely to boost overall GDP growth in this consumption-driven economy.
So things are looking up. Touch wood. Still, caution is warranted, best summarised by the World Economic Forum’s latest white paper that paints an unpredictable collision of geopolitics and technological advancement and adoption in the global economy.
South Africa sits bang in the middle of a political diplomacy saga that could break trade relations on one side while trying to build new ones on the other. Safety and defence have been trending topics as we start this new year. And while we question the rationale of not being invited to the 2026 G20 summit, the impact of the US’s cold shoulder leaves cause for concern. Our G20 sought to strengthen the Global South. The Trump administration seems set to prove that it is weak.
On the technology front, the benefits of efficiency and unlocking of opportunity must be balanced with the threat of exacerbated inequality — domestically between different households, especially as we grapple with jobless economic growth, and internationally between differently adopted economies.
As we look forward to a year of firsts gently shifting our collective society — husbands taking their wives’ surnames, couples sharing parental leave — we must remember that seeking to create some sense of domestic stability is always at the threat of what might or might not happen. We are certainly in for a complex choreography, and it is important for households to prepare for contingency — for the “what ifs”.
• Makhoba is an economist and lead specialist of research and analytics at Liberty, the insurance and asset management arm of Standard Bank.
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