Business confidence in South Africa strengthened in the first quarter, rising three points to reach 47, according to a survey published by Rand Merchant Bank and compiled by the Bureau of Economic Research. The result marks the strongest reading since 2015 when excluding the immediate recovery following the COVID-19 pandemic.
The survey attributed part of the uplift to perceptions of a stable government, a supportive interest-rate environment and currency movements that acted as tailwinds for the economy over the quarter. It also noted that the stronger South African rand against the U.S. dollar and steady interest rates provided a cushioning effect during the period.
Isaah Mhlanga, chief economist at RMB, highlighted lingering external threats in the survey commentary, saying: "Geopolitical developments, largely beyond South Africa’s control ... remain top of mind for many businesses." That caution reflects concerns that events outside the country could affect local business conditions.
President Cyril Ramaphosa reiterated similar worries in public remarks, warning that the conflict in the Middle East was already straining supply chains across Africa and contributing to higher energy prices. His comments came as broader optimism toward government policy appeared to pick up following a speech he delivered in early February that addressed several pressing domestic challenges, including water shortages, widespread crime and unemployment.
Despite the improved readings on sentiment, the RMB survey emphasized that a sustained turnaround in business confidence will hinge on more concrete economic outcomes. "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.
The survey thus presents a mixed picture: stronger headline confidence supported by favorable domestic policy perceptions and exchange-rate developments, but still vulnerable to external geopolitical shocks that can transmit through energy markets and international supply chains. How firms convert the better sentiment into hiring, investment and broader demand will determine whether the improvement proves temporary or the start of a more durable recovery.