Sanisha Packirisamy, Chief Economist & Tshiamo Masike, Economist at Momentum Investments

Business confidence increased in the first quarter of 2026 but escalated conflict between Israel/United States (US) and Iran could weigh on business sentiment in the second quarter of 2026. Furthermore, the geopolitical tensions in the Middle East introduce further downside risks to our revised economic growth expectation of 1.5% in 2026. This is mainly through higher oil prices, which may drive up inflation and delay interest rate cuts, if sustained. Furthermore, rising freight and insurance costs, along with a weaker rand, will increase import prices and inflation, likely slowing consumer spending and overall economic growth.

For 2025, we maintain our growth forecast of 1.2% given an expectation of modest growth in the fourth quarter of 2025. Our projection of better growth in 2026 is underpinned by ongoing support from households and a return to growth in fixed investment, though we acknowledge downside risks from the rising geopolitical tensions.

Read Momentum’s full report here.

ENDS