South African business confidence has slipped to its weakest level in a year, as companies struggle with the fallout of new US tariffs that took effect last month.
The Business Confidence Index, compiled by Rand Merchant Bank (RMB) and Stellenbosch University’s Bureau for Economic Research, fell one point to 39 in the second quarter. At this level, sentiment remains too low to spur fresh investment in Africa’s most industrialised economy.
The drop was driven by the automotive sector, where “front-loading, cancellations and production holidays” dented outlooks, according to RMB.
On August 7, US President Donald Trump imposed a 30% tariff on South African exports. Analysts warn the measures could put 30,000 jobs at risk, hitting both automotive and agricultural industries hardest.
Manufacturing, Retail and Wholesale Weakness
Manufacturing sentiment plunged 10 points to 23, the weakest reading among all sectors. Retailers also saw confidence decline to 32, while the wholesale index dropped to 38.
Isaah Mhlanga, RMB’s chief economist, noted that other economies are also navigating dampened confidence amid a more fragmented global trade order.
Structural Woes Add Pressure
Beyond external shocks, local bottlenecks remain a drag. Businesses continue to cite corruption, red tape, weak logistics, and municipal-level service failures as barriers to growth.
Mhlanga stressed that reforms in logistics, water, and local government are critical if South Africa is to reverse stagnation and tackle one of the world’s highest unemployment rates.
Outlook
With sentiment falling and tariffs threatening exports, South Africa’s economy faces another test of resilience. Without urgent reforms and improved service delivery, business confidence may struggle to recover — putting both growth and jobs at risk.
