Xavier Radio Ug News 24 7
University of Johannesburg (UJ) based economist Dr Ntokozo Nzimande says the negative impact the Israel-Iran conflict might have on South Africa’s economy includes government pausing the decrease of interest rates, as well as the increase in transport and food prices.
Nzimande has been responding to Israel and the United States (US) air bombardment of Iran, which killed, among others, that country’s Supreme Leader, Ayatollah Ali Khamenei.
Historically, the country’s inflation has been heavily influenced by exchange rate fluctuations and international commodity prices, particularly oil.
The South African Reserve Bank (SARB) last adjusted the interest rates in November last year and the current prime lending rate is 10.25% and the repo rate is 6.75%.
This was preceded by a series of rate cuts in 2024 and 2025.
Nzimande says the closure of the Strait of Hormuz, which is within Iran’s territorial waters and where about 20% of global oil trade passes through, will have a negative impact on the country’s economy.
He says, “It will increase fuel prices in South Africa, it will raise transport and food prices, it may push inflation to even above the target and it will complicate the monetary policy decision.”
Nzimande says, “You will know that the Central Bank has been on the campaign to reduce the interest rate and if prices do go up as we expect then what will happen is that this process of cutting the interest rates will be halted or the central bank may increase the interest rate in response, which will in turn affect the South African economy, the cost of borrowing will be high and it will prolong the financial pressure on the households and small businesses.”
AIR SPACE
He says the South African tourism sector will be greatly impacted by the closure of the airspace in some Middle Eastern countries due to this conflict.
Nzimande says, “This will affect the tourism sector, we know that the tourism sector contributes roughly 7% of the country’s GDP and it supports employment, particularly among the youth and the small businesses and more especially the unskilled workers.”
“So what we have heard is that the airspace in some countries in the Middle East has been closed and if this expands to the rest of the Middle East, flight routes will become longer and more expensive, and the airline cost will increase, and it will increase what we call the travel uncertainty so that will affect the GDP through the tourism sector,” he adds.
Aviation expert Guy Leitch says it is not possible to estimate how long the current air travel disruptions could last.
Leitch says the cessation of hostilities would determine the resumption of air travel to and from the region.
He says, “It’s the biggest disruption we’ve had, the first was actually going to be 9/11 when we saw all those aircraft parked on the ground unable to cross the Atlantic. Though obviously, the COVID-19 lockdown must be right up there as well.”
Leitch adds: “How long is this all likely to go on? Well, I’m afraid I honestly don’t know how much longer the hostilities are going to go on. It might take weeks or even months, I suppose, in which case the airports are going to continue to stay locked down, but assuming that hostilities end. I would say it’s going to take at least three or four days, or a week before schedules and services can be restored normally.”
VIDEO | Markets on March 2, 2026:
Additional reporting by Bontle Motsoatsoe.
www.sabcnews.com, https://www.sabcnews.com/sabcnews/attacks-on-iran-will-impact-on-sas-economy-negatively-economist/
