South Africa’s business confidence took a hit in the second quarter of 2025, dropping five points to 40. This decline hints at a slowdown in economic momentum, with many businesses feeling uneasy about the trading environment ahead.
The latest RMB/BER Business Confidence Index (BCI) paints a picture of caution, following a barely-there recovery in early 2024. Only 40% of companies in sectors sensitive to economic cycles said they were satisfied with business conditions — a clear sign that optimism is fading fast.
Confidence Under Pressure Across Most Sectors
The slump in business confidence came down to drops in four out of five key sectors. Building contractors, in particular, saw their confidence plunge 10 points to 35 — hitting a near three-year low. That’s a red flag for the construction industry, often seen as a barometer for broader economic health.
Wholesale trade was the lone bright spot, with a sharp jump in confidence that helped soften the overall blow. This pattern is eerily similar to the previous quarter when confidence in new vehicle dealers boosted the overall numbers despite dips elsewhere.
Businesses seem caught between global and local headwinds. Global trade jitters continue to rattle markets, while strained diplomatic relations between the US and South Africa are adding an extra layer of uncertainty. Meanwhile, on the home front, logistical snags are making it tougher to get goods and services where they need to be, further weighing on morale.
Economic Growth Hits a Snag
This dampened sentiment coincides with official data showing South Africa’s economy barely growing. Statistics South Africa reported a 0.1% increase in GDP for the first quarter of 2025, down from 0.4% in the previous quarter. It’s a sluggish pace that highlights the country’s struggle to maintain steady growth.
Add to that the rand’s rollercoaster ride. The currency shot above R19.90 to the dollar in April, sending jitters through importers and exporters alike, before bouncing back below R18. Currency swings like this can create headaches for businesses trying to plan ahead.
Political Uncertainty Adds to the Mix
On top of economic worries, political uncertainty is casting a long shadow. The scrapping of a proposed VAT hike gave a brief sigh of relief to companies, but questions remain about the stability of the Government of National Unity. The Democratic Alliance’s role in this coalition government is still unclear, fueling doubts about policy direction.
These mixed signals have businesses wondering what’s next. With political stability often linked to investor confidence, the murkiness around government alliances isn’t helping the mood.
Looking Ahead: What Businesses Are Facing
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Global trade uncertainties remain a major drag on sentiment.
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Local logistical challenges are proving stubborn and costly.
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Exchange rate volatility complicates financial planning.
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Political instability clouds future policy moves.
The combination of these factors means businesses are bracing for tougher trading conditions in the months ahead.
A Snapshot of Business Confidence in South Africa, Q2 2025
| Sector | Confidence Index Q1 | Confidence Index Q2 | Change |
|---|---|---|---|
| Building Contractors | 45 | 35 | -10 |
| Wholesale Trade | 38 | 48 | +10 |
| New Vehicle Dealers | 50 | 47 | -3 |
| Manufacturing | 42 | 39 | -3 |
| Retail Trade | 44 | 40 | -4 |
The table shows the sharp fall in building contractors’ confidence standing out. Wholesale trade’s jump is a rare bright spot. But overall, the trend leans toward caution.
All in all, South Africa’s business climate is facing some choppy waters. While the rand has steadied somewhat and some relief measures like scrapped VAT hikes have helped, the broader economic and political landscape remains uncertain. Businesses will be watching closely, hoping for clearer signals and stronger growth soon.
