EMEA Economic Perspectives "South Africa: 5 themes for H2 2026" Kovacs

Research evidence excerpt

EMEA Economic Perspectives "South Africa: 5 themes for H2 2026" Kovacs

Global Research

8 July 2026ab

EMEA Economic Perspectives Economics

EMEA EmergingSouth Africa: 5 themes for H2 2026

Gyorgy Kovacs

Economist

Theme#1: GDP resilience despite rate hikes and rising inflation gyorgy.kovacs@ubs.com

+44-20-7568 7563

Incoming activity indicators show greater economic resilience in South Africa than is

being implied by consensus. In particular: a) our bottom-up GDP tracker currently points Manik Narain

Strategistto 0.4% q/q growth in Q2 based on mainly April data - aided by transportation, trade

manik.narain@ubs.com

and mining; b) new car sales have rebounded strongly; c) corporate credit expansion +44-20-7568 3635

continued in April-May; and d) the improving backdrop in network industries. We keep

our 2026 GDP growth estimate at 1.6% against consensus of 1.2%. Nimrod Mevorach

Strategist

nimrod.mevorach@ubs.com

Theme#2: Resilient fiscal despite gold & PGM wobbles; further rating upgrades +44-20-7567 0779

South Africa had three years of consecutive primary budget surpluses. We looked at

Stephan Potgieter, CFA

three key fiscal sensitivities - regarding broad macro assumptions, commodity prices, Analyst

and market interest rates - and conclude that these do not pose a material risk to fiscal stephan.potgieter@ubs.com

consolidation in 2026. This is mainly due to actually higher nominal GDP growth, lower +44-20-7568 8162

share of mining corporate tax revenues and longer duration of government debt. We

Michael Christelis, FIA CFA

expect a consolidated primary budget surplus of 1.5% of GDP, allowing the public debt Analyst

to GDP ratio to drop to 77% of GDP in FY 2026/27 from c79% of GDP in the preceding michael.christelis@ubs.com

year.