Economic fundamentals continued to improve in the first quarter of 2026, as the geo-political situation deteriorated

South Africa’s economic outlook continued to show modest improvement in the quarter: GDP growth was revised up to 1.6% for the year, while inflation eased to 3.2% in the quarter, and the repo rate held at 6.75% amid external risks.

Retail sales, measured in real terms, rose by 2.8% YoY, however, unemployment climbed to 32.7%, driven by rising youth unemployment as weak job creation and losses in entry-level sectors like construction and informal trade constrained opportunities. Credit active consumers and loan balances (especially personal loans) increased, but overdue debt rose 5.6% QoQ, with 35.5% of loans in arrears.

Every quarter, Eighty20, in collaboration with Xpert Decision Systems (XDS), releases the Credit Stress Report. The 2026 Q1 Credit Stress Report examines consumer credit behaviour and the key economic events that had an impact on South Africans over the period.

Download the Credit Stress Report

Economic Context

Highlights of the First Quarter
South Africa experienced some favourable economic indicators in the quarter:

• Petrol and diesel prices both dropped in quarter one, but the conflict in the Middle East in February spiked oil prices to $91 per barrel, with significant follow-on fuel price increases that landed in quarter two
• FNB/Bureau for Economic Research Consumer Confidence Index rose to -7 from -9
• The Repo rate held steady at 6.75%
• The rand continued to perform favourably against the USD, strengthening by nearly 4.2% QoQ
• Inflation eased to 3.2%
• The 2026 forecast for GDP rose to 1.6%

Credit Market Dynamics

Total open loans grew by 875 000 (1.6%) in the quarter to 56 million loans while outstanding balances grew by R41bn (1.4%) reaching R2.7 trillion.

Over‑indebtedness continued to increase, with 41% of credit active South Africans in default (3 or more months in arrears) on one or more loans. The number of defaulters grew by nearly 400 000 people and the percentage of loans in arrears grew by more than 1m, marking the largest proportion of loans in arrears since 2024 Q3.

The total sum of overdue balances grew in the quarter by R12.6bn, which is 5.6% growth for the quarter, and 14% YoY to R237bn (8.8% of total outstanding debt).

Youth and Credit

As South Africa marks Youth Day in June, attention turns to a generation entering adulthood under increasingly constrained economic conditions. Individuals younger than 24 represent 43% of the population but account for roughly 2% of credit active by number and less than 0.5% by value. A small footprint today, but the foundation of tomorrow’s credit market.

Youth credit behaviour cannot be understood in isolation from the broader economic context. This includes increasing levels of unemployment, deteriorating education prospects, and a collapsing National Student Financial Aid Scheme (NSFAS).

The Eighty20 National Segmentation (ENS) is the lens through which the South African consumer landscape is segmented into distinct cohorts. The Students and Scholars segment has a million individuals who between them hold 1.56m loans and took out roughly 265 000 new loans in Q1 (up 22% YoY), reflecting ongoing, if cautious, engagement with credit. We split this segment into two groups:

• Less Affluent Youth: ~950,000 individuals with an average income of R4 315 per month
• More Affluent Youth: ~72 000 individuals with an average income of R26 504 per month

The gap between these groups is stark, and it fundamentally shapes their engagement with credit. For the Less Affluent Youth, 86% of these consumers have retail credit, 18% have unsecured loans with only 9% owning credit cards, and a negligible amount of vehicle and home loan finance.

For the More Affluent Youth, 64% of these consumers have retail credit, 46% have unsecured loans and 40% have credit cards, with 22% VAF and 4% home loans. The biggest contributor to the total exposure for this cohort is in VAF (49%) – which is due to the high value of VAF products.

The 2026 Q1 Credit Stress Report findings likely mark the end of the recent run of positive economic news. In the second quarter, with oil above $100 per barrel, we saw two of the largest fuel price increases in recent memory, an 8.76% rise in electricity tariffs, and inflation climbing to 4%. We will soon see the impact of the conflict on food and other prices.

The hope is the Middle East conflict is a short one, and the government’s plans with the 2026 budget will provide the calm needed to weather this storm. This economic data will be factored into the next Credit Stress Report as we continue to track consumer and credit behaviour.

Download the Credit Stress Report

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