The regional economy in Sub-Sahara Africa is forecast to expand by 4.3% in 2026, up from the World Bank's previous projection of 4.1% and an estimated 4.0% in 2025.
The World Bank has raised its economic growth forecast for South Africa this year to 1.4%, slightly higher than its June 2022 expectation but lower than its January 2025 expectation.
According to the World Bank’s Global Economic Prospects, which gives an update on global economic developments, global prospects remain firmly tied to United States (US) President Donald Trump’s ‘America First’ agenda.
Brendon Verster, senior economist at Oxford Economics Africa, says familiar challenges continue to plague economies across sub-Saharan Africa (SSA), with the World Bank highlighting that economic growth remains insufficient to generate meaningful reductions in unemployment and poverty.
The World Bank says the global economy is proving more resilient than anticipated amid persistent trade tensions and policy uncertainty, with global economic growth projected to ease to 2.6% this year from an estimated 2.7% in 2025.
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World Bank slightly more upbeat about SA than in June 2025
Verster says the World Bank’s latest forecasts are slightly more upbeat than its June 2025 update, when it predicted that global gross domestic product (GDP) growth would dip to 2.3% in 2025 before nudging higher to 2.4% in 2026.
The upward adjustment largely stems from better-than-expected growth in the US, but the World Bank pointed out that the 2020s are set to be the weakest decade for global growth since the 1960s, with its chief economist, Indermit Gill, noting that “with each passing year, the global economy has become less capable of generating growth and seemingly more resilient to policy uncertainty.”
“With all economies in the region predicted to expand this year, the World Bank commented that its improved outlook is driven by ongoing reforms in some of the region’s heavyweight economies, robust domestic investment and easing price pressures.”
The World Bank raised South Africa’s 2026 growth projection to 1.4%, up 0.3 percentage points from its June 2025 forecast and marginally higher than the estimated 1.3% expansion in 2025 (previously 0.7%). For 2027, the World Bank expects economic growth of 1.5%.
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Private consumption and reform momentum growth drivers – World Bank
Verster says this improved outlook is mainly based on reform momentum in energy and logistics, coupled with rising public investment. “Private consumption and investment are expected to remain the largest growth drivers, supported by efforts to improve the efficiency of public expenditure and ease supply-side constraints.”
South Africa, where activity is expected to be underpinned by private consumption and investment. Ongoing reforms in the business environment and the public sector are expected to continue supporting growth.
The World Bank points out that growth diverged among the region’s three largest economies, firming in Nigeria and South Africa but moderating in Ethiopia. The World Bank says growth strengthened in 2025 to 1.3% in South Africa, supported by more reliable electricity supply, a bumper agricultural harvest and a pickup in business confidence toward year-end.
It also noted that fiscal consolidation efforts and a lower inflation target further bolstered investor sentiment.
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World Bank sees positive moves in SA that crowd in investment
The Bank also points out that continued reform momentum, particularly in energy and logistics, alongside rising public investment, is expected to crowd in private investment and support medium-term growth prospects.
However, private consumption and investment will remain the main growth drivers, aided by efforts to improve public-expenditure efficiency and ease supply-side constraints.
The World Bank also points out that while the direct exposure of most economies in the region to global trade fragmentation remains limited, there are notable exceptions, such as Côte d’Ivoire, Kenya, Lesotho, Madagascar, Mauritius, and South Africa, which rely heavily on US markets for their goods and commodity exports.
Moreover, the Bank says, adverse shifts in trade policy may lead to a sharper-than-anticipated slowdown in global growth, which could be accompanied by further declines in global commodity prices and dampen demand, including for minerals and metals, which are the main exports of several of the region’s economies.
Lower prices for these commodities would have particularly negative effects on the region through diminished economic activity and narrower fiscal space, the World Bank warns.
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World Bank sees global economic and geopolitical volatility will persist under ‘America First‘
Verster says the first few days of 2026 showed that global economic and geopolitical volatility will likely persist this year as Trump pursues his ‘America First’ agenda. “Although the World Bank has struck a more optimistic tone, we agree that risks remain largely tilted to the downside. The Bank highlighted that per capita income gains will remain insufficient to reduce extreme poverty and drive employment creation.”
Commodity exporters, especially those in gold, coffee, and copper, could benefit from price tailwinds, but the rewards could be tempered by weaker demand and persistent global trade frictions, Verster says.
“What’s more, economic activity across the region could benefit from duty-free access to the Chinese market, structural reforms and a renewed focus on resource beneficiation. Yet our country analysts point out that stronger Chinese real GDP growth is expected to have no impact on economic prospects across most of the continent’s largest economies.
“We previously noted that the Chinese economy is not growing at the pace it used to, which could keep a lid on import demand.”
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Agoa also hangs in the balance, World Bank notes
Verster points out that the future of the African Growth and Opportunity Act (Agoa) also hangs in the balance after the US House of Representatives recently approved a three-year extension.
“Although Trump’s tariff salvo effectively negates the Act, and while the programme has so far shown little evidence of long-term industrialisation, not all goods are covered by Trump’s tariffs, meaning that duty-free trade would still apply in some cases, while non-Agoa countries will face the higher most-favoured-nation (MFN) rate.
“The MFN rate would also apply if any of Trump’s tariffs were unwound, either by Congress or the Supreme Court.”
