Market Update: ECONOMIC WEEK AHEAD | A glimpse into Q1 business sentiment – Full Analysis

South Africa faces a relatively quiet week ahead on the data front after the excitement of last week’s budget.

The 2026 budget brought an optimistic view of South Africa’s economic and fiscal trajectory, with the National Treasury raising its GDP growth forecast to 1.4%, from 1.2% in November’s medium-term budget policy statement.

It signalled a “turning point” in the country’s debt stabilisation story, with debt expected to steadily decline after 2026, and promised modest tax relief for individuals, withdrawing a previously proposed R20bn tax increase and adjusting tax brackets for inflation for the first time in two years.

A handful of data releases this week will provide an indication of the health of South Africa’s economy in the first two months of the year, grounding these ambitions in reality and offering insight into the outlook of private sector players.

On Monday, Absa’s manufacturing purchasing managers’ index (PMI) will paint a picture of how the manufacturing sector is performing in the first quarter of the year.

After a largely subdued 2025, the PMI figure staged a tentative recovery in January amid stronger local demand and improved business activity.

Investec economist Lara Hodes expects the figure to have increased further from 48.7 to about 49.2 in February, with the results of January’s survey suggesting that production growth at factories could be reaccelerating in Q1.

The Bureau of Economic Research’s (BER) business confidence index (BCI), set for release on Wednesday, is also expected to reflect cautious optimism among businesses.

Confidence is projected to have improved further in the first quarter, said Hodes, extending a broader trend of rising optimism about operating conditions and the economic outlook.

“The economy is beginning to see some of its structural challenges worked down,” she said.

“These challenges have been impeding optimal economic activity and export potential and, so, job creation. We expect growth of 1.5% for this year, accelerating in the medium-term.”

The BCI rose to 45 points in the fourth quarter, from 38 for the previous three months and the third straight increase, meaning just less than half of respondents were satisfied with prevailing business conditions.

“The BCI is a pure sentiment measure and a reliable gauge of cyclical momentum (or the lack thereof) in the economy,” said BER chief economist Lisette Ijssel de Schepper.

“A sustained improvement in confidence would be an important catalyst for much-needed investment and employment growth.”