Business Confidence Dips Amid Rising Middle East Tensions
The latest RMB/BER business confidence index slipped eight points to a reading of 39 in the second quarter, signalling a noticeable loss of momentum among firms. The decline, reported by Rand Merchant Bank (RMB) in partnership with the Bureau for Economic Research (BER), reflects growing unease over geopolitical developments that are reshaping commodity markets and monetary‑policy expectations.
What the RMB/BER Index Measures
The RMB/BER index is a monthly survey that gauges the sentiment of South African companies across sectors such as manufacturing, retail, and services. A score above 50 indicates optimism, while figures below 50 suggest pessimism. The drop to 39 places the index firmly in the pessimistic zone, the lowest level recorded since early 2023.
Oil Price Spikes and Interest‑Rate Shifts
According to RMB’s macro‑economic analysis, the primary driver behind the confidence slide is the surge in Brent crude prices, which climbed above $90 per barrel amid escalating tensions in the Middle East. Higher oil costs increase input expenses for transport‑intensive industries and raise inflationary pressures, prompting central banks to reassess the trajectory of interest rates.
In response, many firms have revised their investment plans, delaying capital expenditures and tightening hiring freezes. The uncertainty surrounding future monetary policy has also led to a more cautious approach to credit expansion, further dampening business sentiment.
Maritime Security Developments in the Indian Ocean
While the confidence index focuses on domestic economic conditions, external security events are feeding into the broader risk environment. On March 9, 2026, the Pakistan Navy released footage showing a sailor operating a weapon aboard a frigate escorting the merchant vessel Muhafiz‑ul‑Bahr. The operation, part of the ongoing Muhafiz‑ul‑Bahr maritime security initiative, aims to safeguard key sea lanes that are increasingly vulnerable to regional spill‑over from the U.S.–Israeli conflict with Iran.
The visual, distributed by the Inter‑Services Public Relations (ISPR) and shared via Reuters, underscores how naval patrols are being intensified to deter potential threats to commercial shipping. Such security measures, while necessary, add another layer of cost and complexity for firms reliant on ocean freight.
Expert Perspective: Keabetswe Mojapelo on the Outlook
To gain deeper insight, Business Day TV interviewed Keabetswe Mojapelo, a macroeconomist at RMB. Mojapelo noted:
“The confluence of higher oil prices, shifting rate expectations, and heightened security risks is forcing companies to adopt a more defensive posture. Until we see a de‑escalation in the Gulf and a clearer signal from major central banks, confidence is likely to remain subdued.”
She added that sectors with strong domestic demand—such as retail and consumer goods—may weather the storm better than export‑oriented manufacturers that are directly exposed to freight costs and commodity volatility.
Key Takeaways for Business Leaders
- Monitor Brent crude trends; a sustained move above $90/barrel could further erode profit margins.
- Review hedging strategies for foreign exchange and interest‑rate exposure as central banks reassess policy.
- Assess supply‑chain resilience, especially for routes transiting the Gulf of Aden and the Arabian Sea.
- Consider scenario planning that incorporates both geopolitical risk and monetary‑policy shifts.
By staying attuned to these interconnected factors, companies can better navigate the current climate of uncertainty and position themselves for recovery when regional tensions ease and market conditions stabilise.
