South African business confidence rose by three points in the first quarter, supported by a stable government, a favourable interest rate environment, and foreign exchange gains, a survey published on Wednesday showed, while cautioning that the Middle East conflict could pose a risk.
Business confidence reached 47 points in the quarter, marking the strongest reading since 2015, excluding the post-COVID recovery period, according to the survey by Rand Merchant Bank compiled with the Bureau of Economic Research.
“Geopolitical developments, largely beyond South Africa’s control … remain top of mind for many businesses,” said Isaah Mhlanga, chief economist at RMB.
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President Cyril Ramaphosa on Wednesday echoed those concerns, warning that the Middle East conflict is already straining African supply chains and pushing up energy prices.
Despite these threats, the survey highlighted improving sentiment toward the government following Ramaphosa’s early-February address on major domestic challenges, including water shortages, widespread crime, and unemployment.
“A sustained improvement in confidence will ultimately depend on stronger demand, continued policy credibility and progress on structural reforms. For now, sentiment is improving but translating that into durable growth remains the key test for 2026,” Mhlanga added.
According to Reuters, the survey also noted that the relative strength of the South African rand against the U.S. dollar, along with stable interest rates, provided additional support to the economy during the quarter.
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Image Credit: Reuters
