The South African economy is expected to end its longest quarterly growth in nearly a decade as domestic demand was curtailed by the war in Iran and key industries that account for nearly one-fifth of the gross domestic product have shrunk. According to the median estimate based on a survey of 14 economists, GDP is likely to shrink by 0.1% in the second quarter, while the effect of the 25 basis point rate hike in May also began to spread to the economy, suppressing domestic demand. The war drove up production costs, causing manufacturing and mining output to fall by 1.5% and 2.7%, respectively. There was a 0.5% increase in the previous quarter. Independent economist John Luce predicts that as higher inflation and higher interest rates curb consumer spending, the pressure of the Iran war on the South African economy will become more prominent in the second half of this year. “The slowdown in actual consumer spending last year will be a major drag.” he said. Luz said, “I don't think the economy will shrink yet, but the growth rate remains positive. The level of inflation has risen this year, and inflation is likely to be high throughout the year, and interest rates will rise slightly again.”

The South African economy is expected to end its longest quarterly growth in nearly a decade as domestic demand was curtailed by the war in Iran and key industries that account for nearly one-fifth of the gross domestic product have shrunk. According to the median estimate based on a survey of 14 economists, GDP is likely to shrink by 0.1% in the second quarter, while the effect of the 25 basis point rate hike in May also began to spread to the economy, suppressing domestic demand. The war drove up production costs, causing manufacturing and mining output to fall by 1.5% and 2.7%, respectively. There was a 0.5% increase in the previous quarter. Independent economist John Luce predicts that as higher inflation and higher interest rates curb consumer spending, the pressure of the Iran war on the South African economy will become more prominent in the second half of this year. “The slowdown in actual consumer spending last year will be a major drag.” he said. Luz said, “I don't think the economy will shrink yet, but the growth rate remains positive. The level of inflation has risen this year, and inflation is likely to be high throughout the year, and interest rates will rise slightly again.”