South African business sentiment eased in March as global geopolitical instability, particularly in the Middle East, began to put greater pressure on domestic financial and trade conditions.
latest Business Confidence Index (BCI) The index released on Tuesday by the South African Chamber of Commerce and Industry (SAICI) saw a decline of 3.3 points, bringing the index to 131.3 for the month. According to this, this is the second consecutive monthly decline in 2026 business Report.
Despite the setback, confidence levels remain stronger than a year ago, underscoring a broadly better baseline than 2025.
Saiki said the index was 7.8 points higher than March 2025, with the first quarter of 2026 averaging 132.4, compared with 123.1 during the same period last year.
The decline in March followed a choppy start to the year, with the index slipping in January before recovering in February.
According to Saiki, the latest weakness was largely driven by external shocks related to the ongoing conflict in the Middle East, which has disrupted global markets and added uncertainty to key indicators.
“The decline in BCI between February and March 2026 (month-on-month) was primarily the result of a more volatile and weaker rand exchange rate, lower share prices on the JSE, lower global precious metals prices and reduced merchandise import volumes,” the organization said.
It said these movements were primarily the result of external pressures arising from the conflict, particularly its impact on global energy markets.
However, some domestic factors helped offset the decline. Strong new vehicle sales, improvement in international tourism arrivals and low inflation provided partial support to the overall sentiment during the month.
On a year-on-year basis, Saiki pointed to several positive contributors to confidence, including higher inbound tourism, stronger precious metal prices, increased vehicle sales and gains in the JSE All-Share Index.
At the same time, the chamber warned of ongoing structural and cyclical risks facing the economy in 2026. These include low trade volumes, weak retail performance, rising energy costs, sluggish manufacturing activity and a continued decline in actual building approvals.
Saiki said global conditions in March were significantly influenced by the Middle East conflict, particularly due to its impact on oil supply and pricing. While South Africa has benefited to some extent from strong commodity prices and a relatively stable currency, the broader external environment remains a matter of concern.
The chamber said the unusually strong improvement in business confidence seen in late 2025 and early 2026 presents an opportunity to translate sentiment into solid economic activity.
“South Africa is in the fortunate position that its business sentiment has been somewhat insulated from unique negative events. However this advantage may create a false perception where the real economy shows signs of stagnation,” it said.
Economists expressed concern that early signs of global stress are beginning to appear in domestic indicators as well.
Professor Raymond Parsons, an economist at North-West University Business School, said the BCI was reflecting the early consequences of a global energy shock linked to the Middle East conflict.
“On the positive side, the initial shock to business sentiment may be temporary, and the economy still has the resilience to deal with ongoing external economic shocks,” he said.
Parsons said uncertainty around growth and inflation is increasing, with future sentiment dependent on the duration of the conflict, interest rate decisions by the South African Reserve Bank and policy responses aimed at reducing cost-of-living pressures.
He also pointed to the role of the government's recently appointed Ministerial Task Team in mitigating the impact on fuel, food security and household costs.
Professor Waldo Krugel, an economist at North West University, said the latest data represented one of the first clear signs of global instability through local economic indicators.
“The impact of the US and Israel war with Iran is firstly on the exchange rate, JSE and oil prices and this is reflected in the indices,” he said.
He warned that further pressures were likely to emerge in the coming months as higher import costs and inflationary effects take their toll on the economy.
“Second-round effects on the cost of imported products and inflation in South Africa more broadly are still in the pipeline. This shows that we cannot escape the consequences of global events.”
Meanwhile, Unisa economist Dr Eliphas Ndou said weak confidence could put fresh pressure on recent macroeconomic progress.
He said the index is becoming increasingly sensitive to inflationary pressures associated with oil price volatility, exchange rate fluctuations and global uncertainty.
“The index, as a leading indicator of economic activity, points to an imminent slowdown in economic growth,” he said.
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