Coronation Fund Managers says that the impact of the war in Iran will lead to increased pain on South African households and deal a blow to the nation’s economy just as it was turning a corner. <\/p>\n\n\n\n
Coronation said that the six months ending 31 March were split into two distinct halves, which included initial market highs followed by the chaos caused by the Iran War. <\/p>\n\n\n\n
The asset manager, which manages R746 billion in total assets under management, said global markets ended 2025 on a high note amid resilient growth.<\/p>\n\n\n\n
The market was then thrown into chaos by the sudden escalation of conflict in the Middle East and the closure of the Strait of Hormuz in early March. <\/p>\n\n\n\n
“What had been a constructive start to the year gave way to a sharp risk-off move, as the geopolitical and economic consequences of the conflict became apparent,” said Coronation. <\/p>\n\n\n\n
“The oil crisis has affected all economies and will profoundly affect geopolitics and geoeconomics for years to come.” <\/p>\n\n\n\n
In South Africa, there is concern about the resulting impact on households on the nation’s early economic recovery. <\/p>\n\n\n\n
It said that a sharp rise in fuel prices would impact all parts of the economy and stretch already-limited household budgets. <\/p>\n\n\n\n
The rise in fuel prices led to inflation reaching 4.0% in April. Given that this is at the upper end of the Reserve Bank’s tolerance band, interest rate hikes are now expected. <\/p>\n\n\n\n
The International Monetary Fund (IMF) recently reduced its growth estimate for South Africa to 1.0%, down from its previous projection of 1.4%. <\/p>\n\n\n\n
However, Coronation said that it’s not all doom and gloom, with some encouraging signs. <\/p>\n\n\n\n
This includes South Africa exiting the grey list in late 2025, an upgrade in credit rating from S&P that followed soon after, and improvements at state-owned entities.<\/p>\n\n\n\n
It added that South Africa now also has a stable power supply, and that there has been tangible progress in energy reforms, with early signs of recovery in transport and logistics.<\/p>\n\n\n\n
“The appetite from the government to involve the private sector, leveraging available skills in assisting with these reforms, is to be commended,” said the group. <\/p>\n\n\n\n
“This reform momentum will likely increase as private sector participation gains traction. However, water infrastructure and supply remain of grave concern, as does the condition of many of our municipalities.” <\/p>\n\n\n\n
It added that business and investor confidence should continue to improve as the Government of National Unity (GNU) matures. <\/p>\n\n\n\n
“The 2026 Budget underscored a commitment to fiscal discipline, and we are seeing clear signs of improved governance in several key ministries,” said Coronation. <\/p>\n\n\n\n
Nevertheless, the group noted that the world is in a period of heightened volatility and uncertainty, as one crisis cascades into the next. <\/p>\n\n\n\n
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