The resilience shown by the South African economy since re-escalation of the US-Israel and Iran war, with the rand holding up better than it has during past global shocks, is a direct result of a deliberate build-up of policy credibility, says business organisation Business Leadership South Africa (BLSA) CEO Busisiwe Mavuso.

This build-up includes a lower inflation target, a primary budget surplus that has been widening since 2023/24 after 15 years of deficits and a planned fiscal trajectory that will see government debt peak at 78.9% of GDP this year before falling towards 75% by the end of the decade, she points out in her latest weekly newsletter.

The fiscal discipline has also brought credit rating upgrades, with ratings agency S&P upgrading South Africa's long-term foreign currency credit rating by one notch in November 2025, which was its first upgrade in two decades.

Similarly, ratings agency Moody's revised its outlook from stable to positive in late May and ratings agency Fitch upgraded South Africa's long-term credit rating on June 5, which was its first upgrade in 21 years.

Reforms in the financial sector have added to this resilience, particularly those related to the global antimoney-laundering and combating the financing of terrorism initiative Financial Action Task Force requirements, says Mavuso.

Deposit insurance is now operational through the Corporation for Deposit Insurance and the country has built out its emergency liquidity and resolution frameworks.

These reforms have strengthened an already sophisticated and well-respected financial services sector with strong companies and institutions, including the South African Reserve Bank (SARB), the National Treasury and regulator the Prudential Authority, she says.

Prudential Authority CEO Fundzi Tshazibana said this strength acted as a buffer during the US-Israel and Iran war, and that South Africa is now more resilient to external shocks than it was during the Covid-19 pandemic or during the market turmoil that followed Russia's invasion of Ukraine, Mavuso reports.

SARB chief economist and head of economic research Dr Konstantin Makrelov said South Africa has improved its fiscal resilience metrics. He stated that South Africa was better placed to absorb shocks with sound fiscal and monetary policy than with a rising debt-to-GDP ratio or high inflation.

He also said the market's punishing reaction to the 2015 removal of Finance Minister Nhlanhla Nene served as proof that credibility, once lost, was costly to win back.

Unlocking opportunities for South Africa's economy depends on pushing hard on the reforms that make them possible, says Mavuso.

However, the BLSA Reform Tracker for April to June shows that, while there is some good news, there are areas of concern.

A difficulty South Africa’s ambitious reform programme faces, particularly in the key areas of energy, transport, water and local government, is that the reforms are complex, often involving multiple layers, which take time to implement fully, and the results will, therefore, only be felt over the longer term, she says.

The more parts of the wide reform programme that are successfully implemented, the further along South Africa will be in developing an efficient backbone to the economy, on which businesses can operate efficiently and drive faster economic growth.

“It is the best way to create jobs and make a meaningful impact on the unemployment rate. We are on the right path in the fiscal space and heading in the right direction with reforms,” Mavuso says.

Meanwhile, automotive manufacturer Toyota's decision to launch the ninth-generation Hilux at its Prospecton plant, in Durban, is a reflection of the confidence in South Africa's economy, as other markets are competing for such investment, she notes.

Production of the new-generation model is supported by a R10.4-billion investment to retool the plant for the new model, which is the largest single-product investment by Toyota in South Africa.

In a message at the launch event, President Cyril Ramaphosa said South Africa's critical minerals, combined with advanced manufacturing and local beneficiation, could make the country “a leading global hub for future mobility”.

“To unlock this opportunity fully, we must continue improving the efficiency of our logistics system. Modern infrastructure, including reliable ports and efficient railways, determine our global competitiveness,” said Ramaphosa.