South African business confidence hits 11-year high

South Africa’s business sentiment is on the upswing as the country’s latest RMB/BER Business Confidence Index climbs to 47 points in the first quarter of 2026, marking its highest non-rebound level in more than a decade. This positive momentum is significantly attributed to improved financial conditions and political stability, which have played crucial roles in boosting confidence among South African businesses. However, beneath this broad optimism lie sectoral challenges, notably in manufacturing and retail, revealing fractures in the economic canvas. Discussing the drivers behind this marked increase in business confidence, Keabeti Mojapelo, a macroeconomist at RMB, notes the favorable convergence of several economic factors. ‘The confluence of a well-received State of the Nation Address (SONA), a strengthened Rand, supportive interest rates, and declining long-term borrowing costs has translated into enhanced business confidence,’ Mojapelo explains. The period of February 12th to 23rd, during which the survey for this index was conducted, witnessed a positive reception to governmental initiatives and reflected a growing trust in the Government of National Unity (GNU) and their budget approvals. Investment, closely tied to business confidence, is seeing a potential revival after a prolonged period of stagnation. According to Mojapelo, the current economic climate signifies a break from past political and policy uncertainties, paving the way for structural reforms that promise robust future growth. Yet, this optimism does not negate the inherent risks. Mojapelo points out several external challenges, such as export logistics issues, rising geopolitical tensions in the Middle East, and competitive pressures from cheaper imports, which collectively pose potential headwinds to sustained economic recovery. While new vehicle dealers express soaring confidence, reaching a 13-year high, other sectors like retail and manufacturing tell a more nuanced story. Despite a recent uptick in household borrowing and low inflation, consumer momentum appears to be tapering off. Nevertheless, there remains a hopeful anticipation of resurgence, buoyed by expected fiscal boosts once the new tax season commences, as evidenced by optimistic expectations within the wholesaler segment. Manufacturing presents its own complex dynamics. After previously showing growth, the sector now reports a decline, attributed to global demand uncertainties and elevated transport costs, exacerbated by geopolitical tensions. The interplay of international factors presents a multifaceted challenge to domestic manufacturers seeking stability and growth. Financial conditions have undoubtedly played a pivotal role in strengthening business confidence, offering relief across consumer and business spheres. A stronger Rand and easing interest rates significantly lower operational costs for local businesses, contributing to this positive business sentiment. Looking ahead to upcoming GDP figures, RMB’s Mojapelo cautiously forecasts a marginal contraction, flagging anticipated slowdowns in retail and industrial sectors likely to temper growth expectations. Despite this short-term challenge, the underlying economic resilience, particularly within the service industry, suggests potential for recovery and growth in the subsequent quarters. As South Africa navigates these economic crosscurrents, the overall sentiment remains optimistic with a cautious eye towards addressing both internal industry challenges and external geopolitical pressures.