Expert warns SA’s growth forecast is too optimistic as Godongwana unveils fuel relief

Economist, Dawie Roodt, has warned that South Africa’s economic growth forecast of 1.2% for 2026 is overly optimistic, arguing that the country’s weak economy remains its biggest challenge despite signs of improving public finances.

Reacting to Finance Minister, Enoch Godongwana’s, Medium-Term Budget Policy Statement (MTBPS) on Wednesday, Roodt said growth was likely to fall below 1%, leaving the economy unable to generate enough jobs or sustain the cost of running the state.

He attributed the sluggish performance to what he described as misguided macroeconomic policies, corruption and incompetence across ANC-led municipalities, state-owned enterprises and national government departments.

“The economy is not growing fast enough to support this massive state machinery. The economy is not growing fast enough to reduce poverty and unemployment,” Roodt said.

Godongwana revised South Africa’s growth forecast for 2026 down from the 1.6% projected in February to 1.2%, citing a deteriorating global outlook, disruptions to oil supplies caused by conflict in the Middle East and weakening activity in export-linked sectors.

Growth is projected to improve to 1.6% in 2027 and reach 2% by 2029. The minister said structural reforms, stronger state capacity and investment in infrastructure were essential to putting the economy on a faster growth trajectory.

However, Roodt questioned whether the measures announced would be sufficient, particularly the additional funding directed to municipalities.

He argued that municipalities should finance their own expenditure and warned that transferring more national revenue to local government risked sustaining inefficient administrations.

Despite his concerns, Roodt acknowledged progress in the country’s fiscal position.

Godongwana said debt had stabilised at 78.4% of gross domestic product (GDP) in 2025/26, while the budget deficit was expected to narrow to 3.9% of GDP this financial year, from the 4% forecast in February.

Roodt cautioned, however, that the improving figures were being achieved partly through a heavier tax burden on an already weak economy and additional revenue from higher commodity prices.

He said the country needed to reduce its deficit and debt levels through stronger economic growth rather than increased pressure on taxpayers.

Nevertheless, Roodt said Godongwana deserved credit for the progress made and predicted that South Africa could receive a further credit rating upgrade in the coming months.

Among the key announcements in the mid-term budget was temporary relief from rising fuel prices, which have placed pressure on households and businesses.

Godongwana announced that the fuel levy would be reduced by R3 per litre for diesel and R1.50 per litre for petrol from 4 November until 1 December 2026. 

The relief will then continue at a lower level, with reductions of R1.50 per litre for diesel and R1 per litre for petrol until 5 January 2027.

The intervention will provide R10 billion in relief, funded by returning R10 billion previously transferred to the Central Energy Fund to the National Revenue Fund.

The minister said the measure would ease cost-of-living pressures without undermining the sustainability of public finances.

RISE Mzansi leader, Songezo Zibi, welcomed the temporary relief, along with the R38.1 billion in savings and increased investment in infrastructure. However, he warned that short-term interventions would not resolve the underlying cost-of-living crisis.

Zibi called for faster infrastructure delivery, greater private-sector participation and stricter oversight to prevent public funds from being wasted on delayed or incomplete projects.

The Congress of South African Trade Unions (COSATU), meanwhile, called for decisive measures to address unemployment, strengthen public services and provide relief to workers and poor households. 

The union’s, Matthew Parks, says government needs to invest more boldly in economic growth, employment and municipal services.

On the other hand, MK Party MP, Des van Rooyen, criticised the mid-term budget, saying Godongwana had failed to present realistic plans to tackle unemployment and other challenges facing South Africans. 

He described the government as out of touch with citizens’ realities and said the fuel relief, while welcome, would do little to ease their broader financial struggles.

Build One South Africa (BOSA) leader, Mmusi Maimane, also welcomed the fuel levy reduction but said government needed to do more to grow the economy.

“We have to attract investors. So I would have used some of the over-collection by SARS to give tax incentives for people to come and set up factories so that we can manufacture and develop. We want to make sure that South Africans are safer. There’s a deployment of the army, which I do not support,” Maimane said.  

Godongwana maintained that the country’s improving fiscal position had created room to respond to economic pressures while protecting essential services and supporting investment.

The challenge, however, remains turning that stability into faster growth and meaningful job creation, a test that Roodt believes the government’s current projections and measures may not yet meet.

[WATCH Q&A] THE FUEL LEVY RELIEF

The fuel levy relief comes into effect on the 4th of November, that’s what this budget tells us. This is not vote buying. People used to say we solving load shedding just because of elections and to get the vote but load shedding has been dealt to this day and the lights are still on. The truth speaks for itself.

This relief assists and reaches every South African who fills a tank and rides a taxi, even paraffin users will feel the relief. This relief is targeted at those households. We are not being theoretical, when we do door to door our people tell us about the rising cost of living and this assists in alleviating the pressure.

#MTBPS2026

— ANC SECRETARY GENERAL | Fikile Mbalula (@MbalulaFikile) October 21, 2026

Economic Freedom Fighters Statement on the 2026 Medium Term Budget Policy Statement.

—The fuel relief announced on the eve of the local government elections is a ploy to win votes for a dying liberation movement, not a plan. There is no structural answer to rising fuel prices, which proves that the fuel levy cannot be left to the whim of the Minister. Ending it in early December will send workers into the festive season with empty pockets.

The EFF welcomes the continuation of the Social Relief of Distress grant and calls for a permanent grant that helps unemployed graduates and youth meet their basic needs.

— Economic Freedom Fighters (@EFFSouthAfrica) October 21, 2026