The negative unemployment figures for the first quarter of 2026 are another early warning signal of the shock that the global energy crisis is beginning to have on the South African economy and jobs.
Prof. Raymond Parsons, economist from the North-West University (NWU) Business School, says that while the economy has some resilience and economic buffers, these buffers are limited and partial, with – for now – little room to extend them.
The “green shoots” and incipient economic recovery that were apparent in South Africa in recent months have been jeopardised by negative global developments.
In commenting on the rise of unemployment as reported by the Quarterly Labour Force Survey, Prof. Parsons says the longer the Middle East conflict persists, the greater the downside risks to growth and employment are in the rest of 2026.
“It is clearly in South Africa’s economic interests to see an early end to the United States-Iran war. The two biggest internal laggards in the economy are an inadequate thrust in infrastructural activity, and as yet insufficient levels of fixed investment. Both could be more responsive to intensified economic action, which would help to keep the gross domestic product growth rate in positive territory this year.”
Prof. Parsons says that, also on the positive side, although under renewed pressure, overall household spending may be resilient enough and have sufficient momentum to offset some of the external shocks to the economy this year.
“One of the key factors shaping levels of business and consumer confidence this year will nonetheless be how soon the South African Reserve Bank (SARB) will be compelled to raise interest rates to counter rising cost-inflation in relation to its 3% inflation target. At its next meeting on 28 May the Monetary Policy Committee will need to decide, on the basis of the data available, whether there are already second-round effects developing from emerging headline inflation that have to be countered, or whether it can afford to wait and see for now.”
Prof. Parsons points out that the global reaction from other central banks, which, like the SARB, enjoy high credibility, is that they will not yet rush into interest rate hikes that may unnecessarily damage growth and employment. These considerations will no doubt weigh with the SARB in arriving at its decision later this month.
