The government expects growth to reach and stay above 1% in the medium-term, thanks to strong household consumption and an ongoing rally in the prices of commodities such as gold. However, headwinds in mining and agriculture remain.
This is according to the Budget Review, delivered by finance minister Enoch Godongwana. He tabled the 2026 budget speech during a joint sitting of parliament in Cape Town on Wednesday afternoon.
Godongwana said persistent logistics bottlenecks, weak public infrastructure and the recent outbreak of foot-and-mouth disease continue to weigh on economic activity and pose risks to the outlook.
“In light of this, rapid inclusive growth remains our only durable path forward. Our efforts to promote faster economic growth continue to revolve around the four pillars. [These pillars are to] maintain macroeconomic stability, implement structural reforms, invest in growth-enhancing infrastructure and build state capacity.”
The tabling of the budget comes as SA navigates a fraught global economic environment, characterised by geopolitical tension, trade fragmentation and supply-side inflationary — albeit receding — shocks.
However, the Budget Review warns that although mining has benefited from higher prices for gold and platinum group metals (PGM), these are unlikely to lead to a reversal of the long-term contraction of South African mining output.
“Primary-sector performance is led by a strong performance in agricultural production, where lower livestock output due to animal disease has been offset by strong horticultural and seed output, which have benefited from favourable weather conditions,” Godongwana said.
“The primary-sector outlook is supported by stable energy supply, reduced logistics constraints, digitalisation of the mining cadastre and expectations of La Niña rains benefiting the 2026 agricultural season, while biosecurity risks, particularly that of foot and mouth disease, remain.”
During his state of the nation address (Sona) earlier this month, President Cyril Ramaphosa announced that he had declared a state of emergency over foot-and-mouth and that the government would take steps to address the spread of the disease.
The budget’s Estimates of National Expenditure for the department of agriculture’s vote noted that in efforts to mitigate animal disease outbreaks and plant pests, and ensure compliance with international sanitary and phytosanitary standards, the department plans to conduct annual surveillance for three major animal diseases.”
“[These are] foot-and-mouth, goat plague and Newcastle disease, and three plant pests [namely] exotic fruit fly, citrus greening and banana bunchy top virus in each year of the MTEF period. Awareness about biosecurity will be strengthened through partnerships with traditional leaders, imbizos, media campaigns and farmer training.”
The estimates document said these initiatives are funded through the Animal Production and Health sub-programme, which is allocated R1bn over the period ahead; and the Plant Production and Health sub-programme, which is allocated R443.5m over the same period.
The budget’s estimates of national expenditure for the department of mineral and petroleum resources said over the medium term, the department will focus on promoting investment in the mining and petroleum sectors, transformation, welfare and environmental sustainability.
“An estimated 42.1% (R3.7bn) of the department’s budget over the medium term is set aside for transfers to its entities, which carry out a significant portion of its functions.
“Due to the labour-intensive nature of the department’s work, which requires inspections to be conducted to ensure that mining and petroleum companies comply with legislative requirements, expenditure on compensation of employees accounts for an estimated 33.3% (R3bn) of total expenditure over the period ahead.”
The estimate document said spending on compensation of employees is expected to increase at an average annual rate of 4.1%, from R905.6m in 2025/26 to R1bn in 2028/29.
GDP growth
The Budget Review said after years of languishing below 1% annual growth, and even narrowly averting technical recession territory in some instances, GDP growth is gradually firming up, which is projected to continue in the medium-term.
“Real GDP growth for 2025 is estimated at 1.4%, compared with 1.2% at the time of the 2025 medium-term budget policy statement (MTBPS). Household consumption remains resilient, while exports will benefit from stronger commodity prices over the medium term.”
The review said current global trade volumes reflect increased trade frictions and the ongoing reconfiguration of value chains. “Strengthening South Africa’s domestic growth drivers and diversifying its trading portfolios will help to sustain resilience and reduce vulnerability to external shocks.
“The US is expected to benefit from lower domestic interest rates and strong technology-related investment, while growth in parts of Europe remains constrained by weak manufacturing, demographic pressures and energy-related adjustment costs owing to the Russia-Ukraine war.”
The review said China’s growth is expected to moderate as it transitions from investment-led expansion towards a more consumption-driven model, marking a shift that will influence global trade and commodity demand over the medium term.
TimesLIVE
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