Economists expect South Africa’s economy to remain subdued this year, with growth forecast at around 1.2%
Recent renewed tensions in the Middle East have injected fresh uncertainty into South Africa’s economic outlook, with higher oil prices adding to inflation risks that could complicate the path for future interest rate cuts.
Currently, a fragile pause in US-Iran hostilities is holding as mediators attempt to resume diplomacy. Earlier this week, the US struck Iranian sites after merchant ships were attacked in the Strait of Hormuz, prompting retaliatory Iranian missile strikes on US-linked bases in a Gulf state
Investec chief economist Annabel Bishop said Brent crude had climbed back to near $80 a barrel following renewed military action involving Iran and the US. While it was too early to determine whether the latest conflict would escalate, she said prolonged instability could weigh on global growth, fuel inflation and influence interest rate expectations.
“While early July has seen a resumption of some of the conflict in the Middle East, it is too early to tell if there will be further escalations in tensions, negatively affecting growth and inflation and interest rate outlooks yet,” Bishop said.
