Business

The shock South Africa really didn’t need

Staff Writer

 ·4 Mar 2026

The latest RMB/BER Business Confidence Index for the first quarter of 2026 shows that businesses in South Africa were finally crawling out of the 2020/21 COVID-19 slump—but the US’s war in Iran now risks upending that.

The index rose by a further three points to 47 in the first quarter of 2026, building on the improvement in the fourth quarter of 2025.

The BCI now stands six points above its long-term average and a solid 20 points above the post-COVID low reached in 2023Q2.

Barring the post-COVID recovery, this is the highest level of confidence since 2015.

According to the Bureau for Economic Research, the survey was conducted at a prime time, from 12 to 23 February 2026.

This means that business sentiment was supported by a generally well-received State of the Nation Address (SONA) from President Cyril Rampahosa, and riding on the wave of positivity in the economy.

This included the continued stability of the Government of National Unity (GNU) ahead of the 2026 Budget, a stronger rand, interest rates still in a cutting cycle, and macroeconomic indicators pointing to growth.

The BER noted that the backdrop wasn’t without challenges. Locally, the country is facing a nationwide water crisis and the outbreak of foot-and-mouth disease (FMD).

“In addition, available high-frequency official data points to a loss of momentum in the production side of the economy during 2025Q4,” the BER noted.

“This is somewhat unexpected given the more positive underlying activity data from survey results during this period.”

However, the real kicker currently working against the upward swing in sentiment comes from international events.

During the survey, businesses flagged concerns about geopolitical tensions between the United States, Israel and Iran.

“Geopolitical developments, largely beyond South Africa’s control … remain top of mind for many businesses,” said Isaah Mhlanga, chief economist at RMB.

After the survey, however, many worst fears were realised as the US launched ‘Operation Epic Fury’ on 28 February, bombing Iran, and killing its Supreme Leader, sending markets into chaos.

Black swan or momentary shock

Many of the positives flagged by businesses in the survey have been shaken by the United States’ war.

The rand, which had been trading below R16 to the dollar, has tumbled to R16.30/$ as investors moved into safe-haven assets.

While the gold price has risen as a result—moving back over $5,100 an ounce—oil prices have skyrocketed to around $83 a barrel.

Data from the Central Energy Fund (CEF) shows that the impact of the war has been immediate, with local pricing showing an under-recovery building for April of almost R2 a litre for petrol, rising to over R3 a litre for diesel.

This risks delivering an inflation shock after the country had been stabilising toward the South African Reserve Bank’s new 3% target.

If sustained for a long period, this could upend the country’s interest rate-cutting cycle, with forecasters already pricing in the risk of interest rate hikes.

The key question that businesses, economists, and analysts will want answered is whether the war will be brief or drag on.

According to Sebastian Mullins, Head of Multi-Asset and Fixed Income at Schroders, he does not believe that the US attacks are the black swan that the world has been worrying about for years.

“The conflict appears to be very much dominated by the US, reducing the risk of this spiralling into something more dangerous,” he said.

Investec Chief Economist Annabel Bishop also believes that, while volatile, markets will ride out the conflict.

“Volatility is likely, and the US is reportedly warning of the war lasting for four to five weeks,” she said.

“Our expected case does not see the tensions persist, and persistently spread, through the Middle East. The risk has risen slightly, but it still remains an extremely low probability.”

Bishop said that oil price volatility is likely to continue, but there is only a low risk that the Brent crude oil price will exceed $100 a barrel for a sustained period.

“A temporary breach remains possible and would be in a marked risk-off environment, with rand weakness and dollar strength,” she said.

But a $100 mark “is not expected to be sustained, and instead has only a temporary price shock, which South Africa’s Monetary Policy Committee would be expected to look through and not react with higher interest rates,” she said.