South African CEO confidence dipped to 46.2 in Q1 2026, down 3.3 points from Q4 2025’s 49.5, reflecting a cautious start to the year shaped by geopolitical uncertainty, soaring fuel costs, and scepticism around government delivery.

Yet beneath the headline decline lies a more nuanced picture: 55% of CEOs expressed confidence in the 2026 Budget Speech commitments, signalling measured optimism about fiscal discipline, VAT threshold reforms, and infrastructure pledges.

At the same time, Technology and Real Estate sectors surged on the back of AI-driven transformation and improving property fundamentals, while geopolitical fallout from the Iran conflict and spiking petrol prices cast a shadow over consumer-facing and industrial sectors. CEOs emphasised that “government promises” must now translate into visible action—particularly on energy, logistics, and regulatory simplification—if South Africa is to sustain momentum beyond cautious sentiment.

Key highlights

• Overall CEO Confidence Index: 46.2 in Q1 2026, down 3.3 points from Q4 2025 (49.5), settling below the neutral 50 mark.
• Budget Speech confidence: 55% of CEOs supported the 2026 Budget Speech commitments, citing VAT threshold increases (R1 million to R2.3 million), improved fiscal discipline, and infrastructure investment as positives.
• Technology leads sectoral gains: Information Technology rose to 64.1 (+5.1 points), driven by widespread AI adoption and digital transformation.
• Real Estate rebounds strongly: Real Estate climbed to 65.0 (+5.0 points), the quarter’s top performer, on improved funding conditions and renewed residential demand.
• Consumer sectors under pressure: Consumer Discretionary fell sharply to 48.5 (−15.9 points) and Consumer Staples to 43.75 (−11.75 points), weighed down by inflation, petrol price spikes, and weakening disposable income.
• Geopolitical and fuel risks dominate: The Iran conflict and resulting oil price surges were cited repeatedly as threats to inflation, transport costs, and currency stability.

Geopolitical headwinds collide with domestic optimism

The Q1 2026 decline reflects a complex interplay of external shocks and domestic policy signals. CEOs remain wary of macro pressures: “The fuel shortage and rising prices in SA may force reconsideration of planned fuel levy hikes in the budget. High prices threaten to worsen inflation, increase transport costs, strain household and business budgets,” noted a CEO in Financials. Another in Industrials added: “Middle East conflict is a concern. Spike in oil price will fuel inflation globally”. A Real Estate CEO warned: “The Iran War must create huge uncertainty for the stability of the currency and borrowing costs”.

Yet optimism persists in pockets. A Financials CEO observed: “Some fiscal stability is being restored and a focus on economic growth is welcome. But political risks loom large, MK, EFF, and others make up an alarmingly high proportion of the vote”. A Health Care CEO celebrated: “Effect of GNU has kicked in!”. An Industrials CEO pointed to the VAT story: “VAT Thresholds increased are significant for SMEs”. A Financials CEO praised: “R1m to R2.3m VAT registration is very good for the economy!!”.

Critically, scepticism about “government promises” remains pervasive. A Financials CEO said flatly: “Promises do not help. We need action from the President”. A Materials CEO added: “Government is detached from business world”. An Industrials CEO captured the mood: “South Africa has a few green shoots supporting cautiously optimistic bias. SA has had not had good news for 10 years so any news is good news. But Fragile”.

Technology’s AI wave continues: “AI will be helping industries grow,” said a Consumer Discretionary CEO. An Information Technology CEO noted: “We expect improved business climate and more use of AI than before”. Another remarked: “The next several years will be an exciting time for the IT services industry… I am looking for equity investor so that I can advantage of the growth in the ICT industry”.

Sector snapshot: Divergent fortunes across industries

Real Estate (65.0, +5.0 points)

Confidence driver: Improved funding conditions and residential demand recovery
Investment stance: Optimistic on infrastructure and mixed-use projects
Cost pressure: Moderate; currency volatility a concern post-Iran escalation
Policy exposure: Sensitive to interest rate trajectory and municipal service delivery
Risk outlook: Watching geopolitical oil price impact on consumer affordability

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