Standard Bank — Africa’s largest bank by assets — warned that the Middle East war will delay interest rate cuts in South Africa, its CEO told Semafor, joining a chorus of business leaders who say the conflict risks narrowing room for maneuver in Africa’s biggest economy.
“Before this conflict, we expected South African interest rates to be cut three times this year. We now think it will be twice,” Sim Tshabalala said, citing the impact of higher oil and gas prices. Similarly, the CEO of South Africa’s biggest insurer, Sanlam, told Business Day the war will entrench inflation, force higher rates, and reduce asset rates. Other business leaders fear Pretoria, which in January allowed Iran to participate in naval drills in its waters, is perceived to be Tehran’s ally. FirstRand CEO Mary Vilakazi urged Pretoria to adopt a more “more neutral stance,” warning that adverse geopolitical optics could undermine South Africa’s economic recovery.
National Treasury policymakers have already warned that their economic assumptions “need to be interrogated” following the Israel-US military attack on Iran. The South African Reserve Bank will also redraft risk scenarios in the wake of the war.
