Economic Update January 2026

The Downside

South Africa's foreign policy approach continues to disappoint. A recent debacle involving a joint naval operation by members of the Brics+ group, which included Iran, highlights this issue. Iran is known as the world’s foremost sponsor of terrorism. It faces regular condemnation from the United Nations and Western democracies for severe human rights violations.

The South African government appears to be aligning itself with another military dictatorship: China. China's poor human rights record starkly contrasts with that of the US and Western European countries. Since 2010, approximately one million Chinese citizens have left for mainly Western countries. In contrast, over 3.6 million refugees have been admitted to the US for resettlement since 1975, many fleeing China, Venezuela, Cuba, Afghanistan, and El Salvador.

This alignment endangers South Africa’s relationships with the US and the European Union. Economically, China presents a dilemma for South Africa, whose Constitution stands in stark contrast to governance in most communist states. In 2025, South Africa’s imports from China surged to R420 billion. This figure dwarfs South Africa’s exports of high-value-added goods to China (excluding minerals), which totaled only R54 billion. This represents a decline of more than 20% from the previous year. It clearly indicates a lack of efforts to create a balanced trade relationship. Unless the Department of Trade, Industry & Competition acts swiftly, South Africa’s manufacturing sector may face serious challenges, including job losses.

The Upside

New Record for Exports

Despite the challenges, South Africa’s exports have outperformed imports in 2025, resulting in a cumulative trade surplus of R200 billion. This marks the fourth consecutive year that total exports have exceeded R2 trillion. It is also the ninth consecutive year of recorded trade surpluses.

New record for exports

Last year’s standout export performers included precious metals, agriculture, and processed food. South Africa’s international trade heavily relies on five key product groups: minerals, precious metals, vehicles and spares, agriculture and food, and base metals. Together, these groups account for 80% of the country’s total foreign exchange earnings from goods exports.

Looking at the destination of high-value-added (HVA) goods, the US has dropped from second to fourth place, while Belgium has climbed to third. Germany remains in first place. The Southern African Development Community continues to play a significant role as a destination for HVA goods, with five member countries in the top ten export destinations.

Fuel Prices at Four-Year Low

A fortunate combination of lower oil prices and a strong domestic currency has led to the lowest fuel prices in South Africa since early 2022. The Covid-19 pandemic caused significant upheaval in the oil industry, resulting in domestic price increases of 120% and 130% for 95-octane petrol and low-sulphur diesel, respectively, between May 2020 and July 2022.

Fuel prices at four-year low

Since then, prices have remained volatile but have generally followed a downward trend. Currently, petrol and diesel prices are around R20 and R18, respectively, compared to R26.74 and R25.53 in July 2022.

The rand's strengthening since 2025 is a key factor in lower fuel prices. Additionally, oil prices have dropped sharply from mid-2022 to the end of 2025. Brent crude oil prices fell by almost 50%, from $119 per barrel to $60 by December 22, 2025. Lower oil prices will help keep domestic inflation in check.

Gold Surge May Have Peaked

An extraordinary rise in gold prices since early 2024 has seen the world’s most sought-after precious metal increase by 136% in 25 months. Although a record price of $5,379 was recorded on January 29, 2026, it slid back to $4,865 the following day. This volatility is typical after unusual price fluctuations in commodities.

Gold's status as a safe-haven asset has contributed to its price surge. Geopolitical uncertainties, such as Russia’s ongoing war against Ukraine, China’s threats to invade Taiwan, and persistent tensions in the Middle East, have driven net gold purchases via exchange-traded funds (ETFs) and central banks. Additionally, lower bond yields in the US and the EU, resulting from reduced inflation, have made gold more attractive. This is due to the decreased opportunity cost of holding gold instead of US Treasuries and Eurobonds, which pay interest.

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Dr. Botha

On Balance, by Dr Roelof Botha, deliberately emphasizes positive news. It often highlights the resilience of the South African economy and the immense scope for new business opportunities.