Sanisha Packirisamy, Chief Economist; and Tshiamo Masike, Economist; at Momentum Investments

So what?

Economic growth surprised to the upside in the first quarter of 2026 but the impact of the Middle East conflict is yet to be reflected in the data. The spillover effects through higher fuel prices, elevated inflation and tighter monetary policy became more visible from April onwards. Business confidence dropped
in the second quarter, which is likely to weigh on investment decisions while higher living costs and borrowing costs will constrain household spending.

We expect SA’s economy to grow by 1.2% in 2026 before improving to 1.5% in 2027. However, this continues to lag growth rates in peer economies. Risks
to the outlook remain tilted to the downside. A prolonged closure of the Strait of Hormuz and an El Niño weather event represent key risks to growth, with
the SA Reserve Bank (SARB) estimating that growth could be as low as 1.2% in 2027 under these scenarios.

Read Momentum Investments’ full GDP Q1 2026 commentary here.

ENDS