National Treasury expects demand from South Africa’s major trading partners to tick up from an estimated 3.1% in 2025 to 3.3% in 2026, settling at 3.4% in 2027 and 2028.

This trend is supported by strong investments in technology and accommodative fiscal and monetary policies, despite ongoing trade policy uncertainty globally.

Global investor participation in the domestic bond market ticked up from 24.6% in 2024 to 25% in 2025, supported by lower risk aversion and improved perceptions of South Africa’s credit outlook.

In comparison, global trade demand growth is projected to reach 3.4% in 2028.

The sovereign risk premium is expected to ease further in South Africa, supported by government’s sustained commitment to a credible macroeconomic framework.

Treasury explains in it 2026 Budget delivered on February 25 that South Africa’s removal from the Financial Action Task Force grey list and the EU list of high-risk jurisdictions, together with a recent upgrade of the country’s foreign currency sovereign credit rating, all bode well for investor confidence.

TWO SCENARIOS

Treasury outlines two scenarios to it baseline economic growth forecast for South Africa of between 1.6% and 1.9% from 2026 to 2028. In the global upside scenario, an improved global environment is driven by easing geopolitical tensions and more stable trade policies that reduce uncertainty, improve supply chains and boost productivity.

With supply conditions improving, commodity markets can stabilise and oil prices are likely to remain slightly below baseline in the medium term.

Earlier and more decisive monetary easing by major central banks, combined with lower global financial market volatility, strengthens investor appetite for emerging market assets, bolstering emerging market currencies.

In turn, stronger global demand and reduced borrowing costs support exports and enhance financing conditions, raising domestic economic growth above the baseline. In this scenario, South Africa’s economic growth is projected to average 1.9% from 2026 to 2028.

On the other hand, the global downside scenario mulls the possibility of increased geopolitical tensions, further supply chain and critical infrastructure disruptions, as well as heightened uncertainty. These constraints could raise prices for key commodities, including crude oil and gas, while increasing demand for safe‑haven assets such as gold.

This in turn lifts global inflation, delaying monetary policy easing and weakening global growth. Simultaneously, financial market volatility increases, tightening financial conditions and reducing investors’ appetite for risk.

For South Africa, higher oil prices and a weaker exchange rate raise imported inflation, while elevated risk premiums lead to higher borrowing costs, delaying the domestic easing cycle and slowing consumption and investment. As a result, growth in this scenario averages 1.6% from 2026 to 2028.

PROMINENT RISKS

Some of the local risks to South Africa’s trade landscape remain that of persistent logistics bottlenecks, weak public infrastructure and exposure to climate shocks. These continue to raise the cost of doing business and threaten production and investment prospects.

In contrast, Treasury says faster structural reform implementation – particularly in energy and logistics – would boost potential growth.

South Africa is making progress in becoming more trade and investment friendly. Since 2020, for example, government has expanded the use of concessional foreign funding with favourable terms from multilateral and development finance institutions, complemented by Eurobond issuance.

In December last year, government successfully raised $3.5-billion in global markets through an oversubscribed transaction. Government has also introduced a formal process to attract new foreign-currency funding structures from financial institutions, as a result of which several transactions have been approved.