March 4 (Reuters) - South African business confidence climbed 3 points in the first quarter, helped by a stable government, supportive interest rate environment and foreign exchange rate tailwinds, a survey published on Wednesday showed, while warning that the Middle East conflict could pose a risk.
Business confidence stood at 47 points in the quarter, marking the best reading since 2015, excluding the post-COVID recovery, the survey by the Rand Merchant Bank compiled by the Bureau of Economic Research
showed.
"Geopolitical developments, largely beyond South Africa's control ... remain top of mind for many businesses," said Isaah Mhlanga, chief economist at RMB.
South African President Cyril Ramaphosa on Wednesday mirrored those concerns when he warned that the conflict in the Middle East was already putting strain on the African continent's supply chains and causing higher energy prices.
Withstanding the threat, the survey signalled a supportive sentiment for the government following Ramaphosa's speech from early February which addressed major domestic crises affecting the economy including water shortage, widespread crime and unemployment.
"A sustained improvement in confidence will ultimately depend on stronger demand, continued policy credibility and progress on structural reforms. For now, sentiment is improving but translating that into durable growth remains the key test for 2026," Mhlanga added.
The strength of the South African rand against the U.S dollar as well as stable interest rates also provided a cushion to the economy through the quarter, the survey said.
(Reporting by Prerna Bedi in Bengaluru; Editing by Maju SamuelEditing by Maju Samuel)
