Geopolitical tensions may cool South Africa's 2026 economic recovery, warns FNB

First National Bank (FNB) has warned that the ongoing war in the Middle East could slow South Africa’s economic recovery in 2026, even as internal fundamentals remain supportive.

The warning follows a recent move by the International Monetary Fund (IMF) to slash the country's growth forecast by 0.4 percentage points for the 2026 period.

According to FNB, while South Africa entered the year with a sense of cautious optimism, a fragmented geopolitical landscape is now dampening the global outlook and may moderate the pace of domestic economic improvement.

FNB Senior Economist Koketso Mano noted that the ripple effects of global instability are hitting home.

ALSO READ: Godongwana adopts 'wait and see' approach to Middle East conflict risks

Continued pressure on household finances is expected to weigh heavily on discretionary spending, which in turn could slow mortgage demand and house price growth in the near term.

Despite the external headwinds, the bank maintains that the structural outlook isn't entirely bleak. The primary concern remains how long-term domestic potential will square off against immediate global volatility.

"We are worried about the implications of the war on inflation and interest rates, but importantly also growth and employment prospects," says Mano. "That could weigh on the recovery, the strength of the recovery but we still think there are long-term fundamentals that will remain supportive to the market."