The business climate has improved over the short term, between June and July, as well as over the medium term, from July 2024 to July this year, according to the South African Chamber of Commerce and Industry (Sacci).

In the short term, 11 of the 14 Sacci Business Confidence Index (BCI) subindices either remained unchanged or reflected a positive business climate. Over the medium term, ten sub-indices indicated an improved business climate.

Sacci reported that over the year to July 2025, the BCI rose by 7.6 index points and by 3.5 index points between June and July. The average BCI for the first seven months of 2025 was 118.6, which was 7.7 index points higher than the 110.9 recorded for the corresponding period last year.

The chamber said the most positive short-term impacts on business sentiment in July were an increase in new-vehicles sold, rising manufacturing output, higher global prices for gold and platinum and lower inflation.

Negative indicators included reduced volumes of merchandise imports, fewer overseas tourists and a lower real value of building plans passed.

Over the medium term, Sacci noted that an improved business environment was supported by increasing numbers of inbound tourists, higher sales of new vehicles, lower inflation and stronger world prices for precious metals. The only notable negative factor over the year was reduced volumes of merchandise exports.

The chamber cautioned that more uncertainty for South Africa could begin weighing on economic activity as deadlines for additional US tariffs expired without substantial permanent agreements or progress.

It noted that economic growth could improve if trade negotiations led to a more predictable framework and rational tariffs, with negotiations supporting business and investor confidence, predictability and sustainability before other considerations.

Sacci added that the imposition of a general tariff of 30% on South African exports to the US could have unintended and severe consequences for the country’s economy and longer-term trade relations. It said the categories of exports and the sectors affected would play a role in determining the impact on economic growth and employment.

Given South Africa’s open economy, with 32% of output being exported, Sacci said it was important to foster all global economic and business relationships.

It expressed concern that the International Monetary Fund forecast South Africa’s real economic growth at 1% and 1.3% for 2025 and 2026, while the South African Reserve Bank, at its Monetary Policy Committee meeting at the end of July, projected growth of 0.9% and 1.3% for 2025 and 2026, respectively.

The chamber said that, with such subdued economic performance, it was important that all efforts be made to enhance positive foreign trade relations, including with the US, particularly given that the African Growth and Opportunity Act agreement may come to an end.

Sacci said that, although local business confidence had stabilised, it remained important for it to return to levels achieved earlier in the year after the Government of National Unity had started to take shape.

The chamber said the downside risks of potential or actual higher trade tariffs, elevated uncertainty and ongoing geopolitical tensions should give way to restoring confidence, predictability and sustainability in economic performance.