Business confidence in March slides most since Trump’s tariffs

Confidence among South African businesses took its biggest monthly hit last month since the US applied universal tariffs a year ago, according to the South African Chamber of Industry and Commerce’s (Sacci) latest report.

As soaring energy prices, inflation and uncertain trade conditions in the wake of the Iran war clouded the outlook, Sacci’s business confidence index (BCI) fell 3.3% from February to March, its biggest month-on-month drop since April 2025, hitting a five-month low of 131.3 points.

Sacci said the decline was mainly the result of a more volatile and weaker rand exchange rate, lower share prices on the JSE, a dip in precious metal prices and lower volumes of merchandise imports.

Much, if not all, of this can be attributed to the panic that gripped markets last month as Middle East tension threatened to revive inflation. Mining and banking stocks plunged, fuelling the all share index’s biggest drop since October 2008.

While the bourse has staged a quick recovery in recent weeks amid US-Iran peace talks, oil markets have been less sure of the ceasefire. The price of oil, the primary culprit behind inflation fears, still remains above $90 a barrel — about $15 higher than its pre-war levels.

In the short-term (month on month), the broad financial climate has become more uncertain, while real economic activity remains subdued.

—  Sacci economist Richard Downing

“The present war in the Middle East and its effect on crude oil prices and supply poses the question of whether a country has the crude oil supply and refinery capacity to manage short-term challenges of fuel supply,” said Sacci economist Richard Downing.

“In the short-term (month on month), the broad financial climate has become more uncertain, while real economic activity remains subdued.”

However, there is reason to believe that the blow to business sentiment in March may be short-lived. Sacci’s index had been on a steady climb in the six months to March, riding the wave of a stronger rand, easing inflation and soaring gold and platinum prices.

Across the first quarter this year, the index’s average reading was still 9.3 index points higher than in the same period last year. Even March’s BCI was 7.8 points above that of March 2025.

A steady improvement in new vehicle sales in recent months, together with strong overseas tourist numbers over the festive season, continued to have a “notable positive impact” on confidence in March, said Sacci.

“Over the medium-term (year on year), the sub-indices on the financial environment support the improved business climate, while sub-indices on real economic activity remained balanced but orientated towards positive developments,” Downing said.

On the trade front, Sacci’s previous survey of trade conditions showed the majority of respondents in February (63%) were positive about conditions six months from now, despite weak sales volumes and a continued increase in input prices at the start of the year.

“South Africa is in the fortunate situation that its business sentiment is underpinned and hedged against unique negative events,” he said.

“The exceptional increase in business confidence towards year-end in 2025 and up to the first quarter of 2026 is an important opportunity to convert positive business sentiment into real economic activity.”