Iran war creates more South African uncertainty
· The South African
The North-West University (NWU) Policy Uncertainty Index (PUI) showed that the Iran war has increased South African uncertainty. The PUI rose to 77.8 in the first quarter 2026 from 64.9 in the fourth quarter 2025. Nevertheless, it remained below the record 81.0 of the third quarter 2025.
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PUI jpg sourced from data provided by the North-West University Business SchoolThe NWU Business School said the rise in the first quarter 2026 was driven by a sharp increase in economic uncertainty mainly due to the current Middle East global energy crisis.
The NWU noted that It is also no longer just a question of oil-supply disruption. It is now one of oil-supply destruction. This is having ripple effects on the world economy and unsettling global supply chains. Accordingly, both sides of the conflict have targeted oil and natural gas facilities in the region. This included the non-combatant countries such as Bahrain, Kuwait, Saudi Arabia and the United Arab Emirates.
Uncertainty impact
When people are uncertain, they delay making decisions until they have more certainty. If you see storm clouds gather, you wait to see if the hail comes down on you or does it pass you by. In the same way, several central banks such as the European Central Bank, South African Reserve Bank and US Federal Reserve have now adopted a ‘wait and see’ attitude on monetary policy.
Consumers are also likely to adopt a conservative attitude to spending and delay ‘nice to have’ purchases. Instead, they will be spending more on ‘need to have’ items such as petrol and diesel, which will be impacted by the surge in crude oil prices. The latter is due to the effective closure of the Strait of Hormuz, through which a fifth of the world’s oil and natural gas supplies used to move.
However, every dark cloud has a silver lining. In South Africa’s case, the increase in oil prices will result in a rise in coal export prices. Additionally, it will spur the adoption of electric vehicles and increased rooftop solar installations for businesses and households. Equally, it should accelerate the government’s structural reform programme. This would make the South African economy more resilient to outside economic shocks.
Suggested policy response
The NWU suggested that to promote policy certainty three things were necessary.
Firstly, make an objective assessment of the risks and likely scenarios.
Secondly, evolve and communicate an overall plan or appropriate remedies to mitigate and manage the new risks.
Thirdly, minimise any uncertainty about the official commitment to the core macroeconomic framework and about the pace of structural reforms.
‘If business in South Africa expect key changes in the country’s economic trajectory but are very uncertain about what precise form these changes may take, then their confidence will be weak,’ the NWU statement concluded.