Dr Ntokozo Nzimande warns Israel-Iran war hurts SA economy

Middle Eastern military escalation is threatening to torpedo South Africa's fragile economic recovery through surging oil prices and stalled rate cuts.

Dr. Nzimande's economic warning

• University of Johannesburg economist Dr Ntokozo Nzimande flagged fuel, food, and borrowing costs all spiking.
• Nzimande says inflation could blow past the target range entirely.
• South Africa's Reserve Bank may freeze or reverse its rate-cutting campaign.
• Repo rate currently sits at 6.75%, with prime lending at 10.25%.

The Strait of Hormuz is the chokepoint

• Around 20% of global oil trade flows through that narrow waterway.
• South Africa imports roughly 80% of its crude from the Middle East.
• Brent crude already jumped 8 to 13%, landing near 80 to 82 USD a barrel.
• Even a brief disruption would keep prices elevated for months.

Food and transport costs face compounding pressure

• Diesel hikes slam freight companies, and those costs get passed to shoppers.
• Gulf-region natural gas instability could spike global fertiliser prices.
• Bread, milk, meat, and vegetables all travel by road or rail.
• Households already stretched thin would absorb another painful round of increases.

Tourism and air travel caught in the crossfire

• Middle Eastern airspace closures are disrupting international flight routes badly.
• Tourism contributes about 7% to South Africa's GDP.
• Longer, pricier routes would hammer an industry employing young and unskilled workers.
• Nzimande compared the disruption scale to post-9/11 and COVID-era lockdowns.