Business organisation the South African Chamber of Commerce and Industry’s (Sacci’s) Business Confidence Index (BCI) declined by 3.3 index points month-on-month to 131.3 points in March.

The BCI was, however, 7.8 index points higher than in March 2025.

The index also averaged 132.4 points in the first quarter of this year compared with the average of 123.1 in the first quarter of 2025.

The BCI declined by 1.8 index points to 131.4 in January and improved somewhat to 134.6 in February, before declining again in March.

The month-on-month decline between February and March was mainly owing to a more volatile and weaker rand exchange rate, lower share prices on the JSE, the lower global price of precious metals and decreased volumes of merchandise imports.

These declines were mainly owing to exogenous developments related to the war in the Middle East, Sacci points out.

Increased new-vehicles sales, more overseas tourists, higher precious metal prices and JSE all-share prices, and lower inflation had a notable positive impact on business confidence in March, the business chamber adds.

However, businesses were worried about decreased volumes of foreign merchandise trade, restrained retail trade volumes, the higher cost of energy, subdued manufacturing output and the lower real value of building plans passed, Sacci says.

During March, the global economy was impaired by the effect of the war in the Middle East and subsequent economic effects. It notably had a severe impact on the supply and price of crude oil.

In rand terms, the effect on the South African economy has been moderate owing to the high price of precious metals and the relatively stronger rand exchange rate.

Further, challenging trade conditions were confirmed by Sacci’s Trade Conditions Survey, which stood at 45 index points in February, which is below the benchmark of 50 for unchanged conditions.

Of special concern are weak sales volumes and the continued increase in input prices, although about 63% of respondents are positive about conditions in the coming six months, the chamber says.

Over the short term, or month-on-month, the broad financial climate has become more uncertain, while real economic activity remains subdued.

Over the medium term, or year-on-year, the subindices on the financial environment indicated an improved business climate, while subindices on real economic activity remained balanced, albeit oriented towards positive developments.

The ongoing war in the Middle East and its effect on crude oil prices and supply pose questions over whether the country has the crude oil supply and refinery capacity to manage short-term challenges of fuel supply, the chamber states.

Meanwhile, the exceptional increase in business confidence towards year-end in 2025 and up to the first quarter of this year is an important opportunity to convert positive business sentiment into real economic activity.

There also appears to be general consensus among businesses and the Government of National Unity that South Africa should provide an economic and investment environment and policy regime that underpins the expectations of foreign and local investors for the longer term.