Dawie Roodt explains the impact of the Iran war on South Africa’s economy

Efficient Group chief economist Dawie Roodt said the conflict between the United States, Israel, and Iran created uncertainty in the global economy.

The immediate impact was a higher oil price, gold performing well as a safe-haven asset, and the US Dollar strengthening.

“Those are all signs of uncertainty in the financial markets,” Roodt said in a statement about the Iran conflict.

He added that the increase in oil and gold prices was lower than one might have expected under these circumstances.

“We also saw that the financial markets seem to be under pressure in the Middle East, but again, less than what one would have expected,” he said.

Commenting on the possible outcome of this war, he shared a few scenarios –

• Oil prices can remain relatively high or even rise further to as much as $120 per barrel, depending on developments in the Strait of Hormuz.

• A very high oil price will be bad news for the global economy, leading to weaker economic growth, higher inflation, and interest rates remaining high or increasing.

• A good scenario would be that this war ends pretty soon, with the oil price coming down to $70 or even $60 per barrel.

However, the good scenario has been postponed with United States President Donald Trump warning that the conflict will last for weeks.

A potentially prolonged conflict causes uncertainty, which is impacting the global economy and financial markets.

“My suspicion is that much of this conflict will be resolved relatively soon and that oil and other prices are likely to stabilise and perhaps come down a little bit,” he said.

What it means for South Africa

Roodt said the impact on the South African economy and financial markets is similar to that of global markets.

“The high oil price means that the Reserve Bank is likely to postpone a reduction in interest rates now,” he said.

In a worst-case scenario, the central bank may even raise interest rates, especially given South Africa’s inflation target now at 3%.

“The best-case scenario is for the Reserve Bank to postpone an interest rate reduction and for the South African economy not to be affected that much,” he said.

He said the most important aspect of the Iran conflict is South Africa’s international political positioning.

“Recently, South Africa had some military exercises with Iran, and clearly, you do not mess with America,” he said.

South Africa is seen as part of a political bloc which includes Iran, along with a few other nations like Russia and China.

Roodt added that the Iran conflict revealed that BRICS, as a political grouping, is obviously toothless.

“So, it could be an economic grouping, but certainly not a political grouping. We do not hear anything from BRICS so far,” he said.

Also, there is a possible international impact – Iran is one of Russia’s suppliers of military equipment.

That is likely to come to an end now, and that will certainly not be good news for Russia, which is engaged in a war in Ukraine.

However, the good news for Russia is that the emphasis has shifted to the Middle East now, largely moving away from Ukraine.

“So, all in all, there’s a lot of uncertainty, and we simply have to wait and see what is going to happen,” he said.

The National Treasury is confident about South Africa’s finances

On Monday, 2 March 2026, the National Treasury said South Africa’s stronger public finances have given the country a sizable cushion to absorb external shocks.

It added that these shocks include the fallout from the conflict in Iran, which significantly affected global markets.

“It would take a very large shock to derail our fiscal plans,” Treasury Director-General Duncan Pieterse told Bloomberg in an interview. “We have geared ourselves in a way that we can manage some deviation.”

The Treasury projects a primary surplus, which measures revenue minus non-interest spending, of R131 billion in the fiscal year through March 2027.

That’s R60 billion more than this fiscal year’s surplus, which was 0.9% of GDP and will stabilise South Africa’s debt-to-GDP ratio.

For South Africa to be pushed off this path of fiscal consolidation, revenue would either have to fall by R60 billion or government spending would have to jump by the same amount.

The Iran war could affect South Africa’s economic outlook if it persists and impact global growth or oil prices.

However, any headwinds from higher crude prices could be offset by higher prices for gold and other commodities.