South Africa’s business confidence slumped to a five-month low in March as geopolitical instability and a retreating currency dampened the national economic outlook, according to new data released Tuesday.
The South African Chamber of Commerce and Industry (SACCI) reported the Business Confidence Index fell to 131.3 points, dropping from 134.6 in February as global market volatility intensified.
The decline is attributed to the escalating Iran-Israel conflict, which triggered sharp falls in share prices and disrupted international trade routes vital for South African commodity exports.
The rand suffered significant depreciation during the period, at one point weakening beyond R17 per dollar, as investors fled emerging markets in favor of safe-haven assets like the U.S. dollar.
Stock market performance further pressured the index, with the JSE All Share Index losing approximately 10% of its value following the outbreak of hostilities in late February.
Rising energy costs acted as a major drag on sentiment, with Brent crude prices surging toward $120 a barrel, threatening to drive up domestic transport and manufacturing overheads.
Despite the monthly contraction, the index remains 7.8 points higher than March 2025, buoyed by resilient new vehicle sales and a steady recovery in the international tourism sector.
Lower domestic inflation compared to the previous year also provided a marginal cushion, preventing a more severe collapse in business sentiment across the retail and services industries.
SACCI noted that while 63% of businesses remain optimistic about the next six months, the manufacturing sector remains highly vulnerable to sustained high energy prices and trade bottlenecks.
The chamber warned that continued rand volatility and high borrowing costs could further erode investment appetite if Middle Eastern tensions do not de-escalate in the second quarter.
