SA’s best economic start in a decade under threat – FNB

The conflict in the Middle East could derail South Africa’s best economic start in a decade, as higher food and fuel prices rein in the fledgling recovery in the continent’s biggest economy, the head of one of the nation’s top retail lenders said.

“The war does actually put a damper back on growth,” said Harry Kellan, chief executive officer of First National Bank, a unit of South Africa’s second biggest bank by market value FirstRand Ltd.

South Africa’s economy climbed 1.1% in 2025 – the fastest pace in three years – but lagged the International Monetary Fund’s estimate for 4.4% in the sub-Saharan region for last year.

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The nation’s expansion has averaged less than 1% annually for more than a decade.

A credit upgrade by S&P Global Ratings, South Africa’s removal from the Financial Action Task Force’s dirty-money list and slower inflation were signs of a better trajectory.

Momentum was expected to pick up as the government and private sector work to revive dilapidated water infrastructure, and the state tries to intervene to help deeply dysfunctional municipalities that are unable to provide basic services.

But the conflict that started on 28 February has sent oil prices soaring and roiled equity and bond markets across the globe.

The rand has lost 6.7% to the dollar since then, making it the worst-performing major and emerging-market currency in the period. The country’s benchmark stocks gauge is the worst globally in dollar terms, having declined 20%.

“This year we were going from 1.3% GDP growth to further north of 1.5% and significantly toward 2%, and it would have continued going that way,” Kellan said.

South African Central Energy Fund data indicates the possibility of the largest monthly fuel-price increase on record set for April, which will stoke inflation concerns and knock consumer demand.

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Avior Capital Markets cut its forecast for growth in South African gross domestic product this year to 0.2% from a prior estimate of 1.7%, citing the probability of a prolonged conflict in the Middle East, which will consequently see Gulf oil “held hostage”.

“I don’t think our house view for this calendar year goes below 1% growth, but it’s a pity, because it comes off from where it was growing,” Kellan said.

“It will be painful for a period, and then we become resilient and the economy hustles its way out of it.”

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