South Africa Country Risk Rating

South Africa’s overall risk score remains at medium. Political violence risk remains high, rooted in inequality; high unemployment (33.6% in Q2) and corruption. This has prompted a backlash in some areas against immigrants from other South African countries, with protests seen in July. Additionally, infighting in ex-president Zuma’s MK party is causing tensions, while local issues rather than national party bias is becoming more important ahead of November local elections – election results could increase political tensions in some regions. Political interference remains at a medium-high rating due to internal conflicts. While the Government of National Unity (GNU) has shown friction over domestic policy, the administration continues to carry a unified front. The inability of the government to provide stimulus has increased from medium-high to high due to fiscal constraints as high sovereign debt and a narrow tax base continue to dominate. The IMF are projecting that general government debt/GDP at 78.9% in 2026, with a slow creep higher until 2030. The macroeconomic outlook for South Africa remains balanced, supported by moderate inflation and the ongoing lack of electricity power cuts (lower demand, solar and better ESKOM performance). However, high energy prices due to the disruption in the Straits of Hormuz continue to cast a shadow of uncertainty over the horizon. The IMF is forecasting 1.0% 2026 growth followed by 1.3% in 2027. Annual inflation is projected at 3.9% in 2026 by the IMF before slowing to 3.4% in 2027. In the banking sector, solid capital buffers continue to protect institutions from economic shocks, keeping banking sector vulnerability at a medium-low level.