Outlook 2026: South Africa is back on the radar

Without running the risk of using hyperbole, the global economy is fragmenting. Trade tensions are rising, geopolitics is hard-coding uncertainty into markets, and national self-interest is back. This isn’t a temporary shock; it’s becoming a structural reset.

Yet growth has held up, inflation has stayed contained, and capital is rotating rather than retreating. That rotation matters for South Africa.

Read:
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Chasing 3%: Understanding the inflation target debate

In a world of deglobalisation and resource security, the commodities South Africa produces remain strategically important. Structurally softer energy prices are easing inflation pressures, supporting the trade balance and boosting household purchasing power.

At the same time, global investors are rediversifying away from US assets and South Africa is back on the emerging markets (EM) radar – with no small thanks to the White House.

While interest rates are never the most tantalising of economic stories, they remain as crucial as ever to the current economic outlook.

While the US Federal Reserve edges toward further cuts (threats of criminal charges aside), South Africa has eased rates more cautiously, widening the interest rate differential.

That gap has supported the rand, pulled foreign capital into local bonds, and reinforced confidence in domestic assets – a sign of policy credibility, not constraint.

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For once, global and domestic forces are pulling in the same direction.

South Africa’s 10-year bond returned around 25%, one of the strongest performances globally.

This isn’t just about global tailwinds, it reflects tangible domestic progress too:

• A lower inflation target;
• Commitment to fiscal consolidation; and
• Reduced nominal bond issuance.

Structural reform finally showing up in the data

We have seen SA exit the Financial Action Task Force grey list and receive a sovereign credit rating upgrade, along with improving port and rail performance, private-sector rail investment, and new fiscal upside from online betting taxes.

Markets have taken note. The rand has recorded its strongest year since 2009. Bond yields are down sharply. Credit default spreads are at their tightest in over a decade.

Read:
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The JSE delivered a standout performance and South Africa is regaining relevance in global EM indices (with scope for further inflows as index compositions evolve).

This doesn’t mean the risks are gone, however.

Political uncertainty (including succession risk around President Cyril Ramaphosa), upcoming municipal election anxiety, policy missteps and continued dependence on global cycles remain real.

The reform story is credible, but fragile.

Looking at the bigger picture, with the start of 2026 it feels like we are in a world of higher geopolitical tension and weaker institutions, yet paradoxically one that currently favours South Africa.

Listen/read:
Why SA’s long-awaited green shoots are finally starting to surface
Sub-Saharan Africa set to outpace global growth

The opportunity now is execution: protect the gains, deepen reform, and turn cyclical momentum into durable growth.

As a proud Saffa, if we don’t trip over our own feet as we often tend to do, 2026 could mark the most investable South African backdrop we’ve seen in over a decade.

Casey Sprake is head market strategist at AG Capital.

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