After years of navigating the stagnant waters of a post-pandemic slump, South African business sentiment reached a decade-high milestone in early 2026.
However, this hard-won stability now faces a severe litmus test as escalating conflict between the United States and Iran threatens to upend the nation’s economic trajectory.
According to the latest RMB/BER Business Confidence Index (BCI) for the first quarter of 2026, the index climbed a further three points to hit 47. This represents the highest level of corporate optimism seen in South Africa since 2015, barring the brief technical recovery immediately following the 2020/21 COVID-19 lockdowns.
The index now stands six points above its long-term average and a solid 20 points above the historic lows reached in the second quarter of 2023.
The Bureau for Economic Research (BER) conducted the survey between February 12 and 23, a period characterized by domestic optimism.
Sentiment was buoyed by President Cyril Ramaphosa’s well-received State of the Nation Address (SONA), a stabilizing Government of National Unity (GNU) ahead of the 2026 Budget, and a Rand that had finally begun to find its footing.
These factors, combined with an interest rate-cutting cycle and macroeconomic indicators pointing toward growth, created a wave of positivity across the economy.
However, the domestic upward swing is now colliding with international chaos. Following the conclusion of the survey, the global landscape shifted dramatically when the United States launched ‘Operation Epic Fury’ on February 28.
The ensuing military action in Iran, which included the killing of its Supreme Leader, sent markets into immediate turmoil. The Rand, which had been trading below R16.00 to the dollar, tumbled to R16.30/$ as investors moved into safe-haven assets.
For South African businesses, the most immediate threat is the inflationary shock caused by skyrocketing oil prices. While the gold price has risen as a result of moving back over $5,100, an ounce of oil prices have jumped to around $83 a barrel. Data from the Central Energy Fund (CEF) shows that the impact has been immediate, with local pricing showing an under-recovery building for April of almost R2 a litre for petrol and over R3 a litre for diesel.
“Geopolitical developments, largely beyond South Africa’s control… remain top of mind for many businesses,” said Isaah Mhlanga, Chief Economist at RMB. This sentiment reflects the BER’s earlier note that businesses had already flagged concerns about tensions between the U.S., Israel, and Iran during the polling period. The current crisis risks delivering a significant shock just as the country was stabilizing toward the South African Reserve Bank’s new 3% inflation target.
Despite the volatility, some analysts believe the market may ride out the conflict. Sebastian Mullins, Head of Multi-Asset and Fixed Income at Schroders, stated that he does not believe the U.S. attacks represent a “black swan” event. “The conflict appears to be very much dominated by the US, reducing the risk of this spiralling into something more dangerous,” Mullins noted.
Similarly, Investec Chief Economist Annabel Bishop expects the market to endure the current four-to-five-week window of war. “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 explained. She further noted that while oil price volatility is likely to continue, there is a low risk of Brent crude exceeding $100 a barrel for a sustained period.
Bishop concluded that if the shock remains temporary, the Monetary Policy Committee would be expected to “look through” the price spike rather than reacting with higher interest rates. For Nigerian expansion strategists and pan-African investors monitoring the South African market, the situation remains a critical case study in how geopolitical shifts can rapidly influence regional compliance costs, fuel logistics, and employee cost-of-living adjustments.