Africa-Press – South-Africa. South Africa has managed to survive despite the slow pace of structural reforms, as the country has had some protection in the form of commodity cycles and faster global growth.
However, much of this cover is now gone, and rising uncertainty could be the catalyst South Africa needs to accelerate the pace of reforms and achieve faster growth.
Independent economist John Loos and VeriCred Credit Bureau CEO Paul Yon explained that this potential catalyst comes at a time when South African households are under severe pressure.
Loos and Yon explained that the Middle East war is set to affect South African consumers in a number of ways, and its impact is already being felt in the form of higher fuel prices.
They emphasised that these pressures are not expected to subside anytime soon, with initial forecasts predicting that the Brent crude oil price could stay above $95 in the near term.
“Even if prices ease into the $90 range, they are still higher than a year ago, and they are likely to stay elevated throughout 2026,” they said.
“Problems in and around the Strait of Hormuz are not going to disappear overnight, and it will take time to rebuild trust in shipping routes, restore production capacity and reach new agreements that will calm the market.”
Loos and Yon said this will lead to an inflation surge, which South African consumers will feel directly at the fuel pump, then indirectly through higher prices.
“Higher inflation eats into disposable income to a greater extent, curbing ‘real’ consumer purchasing power,” they said.
“This alone could cause slower real (inflation-adjusted) disposable income growth in 2026, after a strong 3.3% growth rate in 2025.”
To make matters worse, they warned that South African consumers will likely also need to contend with interest rate hikes, which have become a very real risk in the face of these inflationary pressures.
In addition, they warned that job creation in South Africa is also exposed to any slowdown in global growth.
“These challenges threaten to reach consumers through fuel bills, grocery costs, bond repayments and salary increments that don’t keep pace with the cost of living,” they said.
The graph below, courtesy of Statistics South Africa, shows the country’s quarterly GDP growth from 2023 to 2025.
South Africa’s moment of truth
Faced with these pressures, Loos and Yon said South African policymakers now have a choice to make.
“Amidst these challenges, there are also benefits, and right now, they may very well be a catalyst for very real change in the country,” they said.
“South Africa has spent years deferring structural reforms, partly because commodity cycles and global growth have provided a degree of cover.”
A commodity boom in 2025, which saw the prices of precious metals like gold and platinum skyrocket, significantly bolstered South Africa’s economy over the past year.
However, the uncertainty brought about by the Middle East war brought this to an abrupt end and dampened global growth projections.
The International Monetary Fund (IMF) recently lowered its projections for global economic growth to 3.1%, down from 3.3% earlier.
The IMF also cut its forecast for South Africa’s GDP growth in 2026 to 1%, down from 1.4% in January, which is below the level the country posted in 2025.
South Africa’s Centre for Risk Analysis (CRA) attributed this, in large part, to the cyclical drivers of the country’s growth beginning to turn.
The organisation explained that local economic growth is primarily driven by consumer spending, which, as Loos and Yon explained, is set to come under severe pressure in 2026.
Therefore, South Africa can no longer rely on consumer spending, a commodity boom, or strong global growth to drive its economic growth.
“Now, much of the cover is gone, and the resultant uncertainty might be accelerating economic policy reform aimed at faster growth,” Loos and Yon said.
They noted that the country has made some progress in implementing reforms over the past few years.
Most notably, the country’s electricity supply has stabilised over the past two years, with load-shedding now essentially a thing of the past.
The country also recently entered into a concession agreement for the Durban port and is progressing with similar railway concessions, which are expected to significantly improve logistics efficiency.
“The Government of National Unity coalition understands, with unusual clarity, that economic performance is now a political imperative,” Loos and Yon said.
“And the current geopolitical complexity and fuel instability could very well be what consolidates this process.”
However, they warned that the pace at which these reforms are progressing is “achingly slow”, and consumers need options now.
Loos and Yon explained that consumers’ “room to manoeuvre” is fairly limited, especially for lower-income households.
Therefore, accelerating the pace of reforms in South Africa – sooner, rather than later – has become critical if the country wishes to make a meaningful dent in unemployment and support strained consumers.
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