MTBPS 2026: growth forecast cut to 1.2%, debt and deficit explained
Photo: Discott, Wikimedia Commons, CC BY-SA 3.0
South Africa's economy is now expected to grow by just 1.2% in 2026, down from the 1.6% forecast in February, but government debt has stopped rising and the budget deficit is slightly smaller than planned. Finance Minister Enoch Godongwana set out the new numbers in his Medium-Term Budget Policy Statement (MTBPS) on Wednesday, 21 October 2026 (MTBPS 2026 speech).
How fast will South Africa's economy grow?
- 2026: 1.2%, cut from 1.6% in the February Budget (MTBPS 2026 speech).
- 2027: 1.6% (MTBPS 2026 speech).
- 2029: 2% (MTBPS 2026 speech).
The minister said growth could go above 3% a year if government "stays the course" on reforms (MTBPS 2026 speech).
Why was the growth forecast cut?
The speech pointed to a weaker world economy. Global growth is now estimated at 3.1% for 2026, down from 3.3% projected in January (MTBPS 2026 speech). The conflict in the Middle East and the closing of the Strait of Hormuz pushed up oil, food and energy prices and raised borrowing costs, including for South Africa (MTBPS 2026 speech). Treasury also flagged El Niño as a risk to producer costs and output, and said export-linked sectors have already lost momentum (MTBPS 2026 speech).
Is government debt still rising?
No. Debt stabilised at 78.4% of GDP in 2025/26, the first time in nearly two decades, and is now falling (MTBPS 2026 speech). The primary surplus (revenue minus spending other than interest) is set to grow from 1.7% of GDP this year to nearly 3% by 2030 (MTBPS 2026 speech).
How big is the budget deficit?
The deficit is expected to be 3.9% of GDP in 2026/27, a little better than the 4.0% forecast in February, and to fall to 2.5% of GDP by 2030 (MTBPS 2026 speech).
What happened to tax collections?
Tax revenue for 2026/27 has been revised up by R17.1 billion compared with February, mainly from higher corporate tax, dividends tax and VAT collections (MTBPS 2026 speech). Treasury said much of this comes from higher commodity prices and is expected to fade over the medium term (MTBPS 2026 speech). Gross tax revenue is projected to rise from R2.14 trillion this year to R2.53 trillion in 2029/30 (MTBPS 2026 speech).
What changes for government spending?
- Spending in 2026/27 can increase by R45.5 billion compared with February, because of the extra revenue (MTBPS 2026 speech).
- A further R38.1 billion in savings has been identified over the next three years, on top of R12 billion identified in the 2026 Budget (MTBPS 2026 speech).
- Draft fiscal anchor legislation, which would require each administration to set and report on its own fiscal goals, was released for comment and is expected to go to Parliament in 2027 (MTBPS 2026 speech).
The MTBPS also announced a temporary fuel levy cut from 4 November 2026 and an update on the proposed online gambling tax (MTBPS 2026 speech).
FAQ
What is South Africa's growth forecast in the MTBPS 2026?
Treasury expects real economic growth of 1.2% in 2026, down from 1.6% forecast in February, rising to 1.6% in 2027 and 2% by 2029.
What is South Africa's debt-to-GDP ratio?
According to the MTBPS 2026, debt stabilised at 78.4% of GDP in 2025/26 and is now falling.
What is the budget deficit for 2026/27?
The MTBPS 2026 expects a deficit of 3.9% of GDP in 2026/27, compared with 4.0% forecast in February, falling to 2.5% by 2030.
Did tax revenue come in higher than expected?
Yes. Gross tax revenue for 2026/27 was revised up by R17.1 billion, mainly from corporate tax, dividends tax and VAT.