Business confidence steadies in May but Middle East conflict, inflation risks weigh on outlook

BUSINESS CONFIDENCE INDEX

- SIPHELELE DLUDLA

SENTIMENT in the business sector in South Africa showed signs of stabilising in May after suffering a sharp decline in April, although concerns about inflation, energy costs and the ongoing conflict in the Middle East continue to cloud the economic outlook.

The South African Chamber of Commerce and Industry (Sacci) Business Confidence Index (BCI), released on Thursday, edged up by 0.5 index points in May to 124.1, recovering slightly from the steep 7.7-point decline recorded in April.

Despite the modest monthly improvement, confidence remained vulnerable to external shocks and rising costs. The chamber cautioned that confidence remains highly sensitive to global developments, particularly oil prices and geopolitical tensions, as businesses navigate an increasingly uncertain economic environment.

Sacci said the index remained significantly stronger than a year ago, standing 8.3 points higher than in May 2025, while the average BCI for the first five months of 2026 was 129.0 compared with 120.0 during the same period last year.

According to Sacci, the sharp deterioration in sentiment seen in April was largely linked to the surge in global crude oil prices following the escalation of conflict in the Middle East.