Recent highlights from the Centre for Risk Analysis (CRA) cover political, economic, trade and climate risks affecting South African businesses.
The focus is on tanker-driven fuel price pressure, a Medium Term Budget Policy Statement that delivers stability but not growth, the US midterm elections, and two years of the Government of National Unity (GNU).
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Tanker costs rise
Chris Hattingh, executive director of the CRA, argues that a shortage of effective tanker capacity, rather than a shortage of oil alone, is driving up fuel costs globally and putting South African pump prices under further pressure.
Middle Eastern oil flows fell from 23 million barrels a day in 2025 to 9 million in April, recovering to only 12 million by September. Effective tanker capacity has also been squeezed: US sanctions have sidelined 124 Iranian tankers (13% of the fleet), ship-to-ship transfers take up to 10 days, and routes are longer to avoid danger zones. With each vessel making fewer trips, moving the same volumes as in 2025 now requires dozens more tankers.
These constraints have pushed freight costs from the Middle East to China from about $3 to $35 a barrel since early 2026.
The delivered cost of a Middle Eastern barrel has risen to $143, compared with $131 for US Gulf crude and $126 for Brazilian crude. Daily earnings for a large tanker on the West Africa-to-China route reached about $763,000 on 9 October, compared with a January range of $55,000 to $107,000.
The squeeze is already feeding into fuel supply and pricing.
Refining margins in north-west Europe have turned deeply negative, which could force refiners to cut runs just as diesel stocks reach near historic lows heading into the northern hemisphere winter.
In South Africa, Central Energy Fund data for 8 October showed import costs still exceeding the price built into pump prices, with gaps of R1.70 a litre for 95 petrol, R1.17 for diesel and R3.26 for illuminating paraffin.
The adjustment due tomorrow falls on election day, and the size of the increase remains uncertain.
Hattingh concludes that “the CRA expects petrol, diesel, and paraffin prices to rise further in November,” with diesel carrying “the added risk of supply shortages over the northern hemisphere winter.”
Four developments could change this view: sharp cuts by European refiners, Washington releasing the idle Iranian tankers, a rand stronger than R16.65 to the dollar, and the remaining October Central Energy Fund data showing the gap closing.
Stability, not growth: 2026 Medium Term Budget Policy Statement
In his assessment of the 21 October Medium Term Budget Policy Statement (MTBPS), Hattingh finds that Treasury has delivered credible fiscal stability but still has no plan to lift South Africa’s growth beyond its current trap of around 1%.
Finance minister Enoch Godongwana held the 2026/27 main budget deficit at R301.6bn (3.7% of GDP), essentially unchanged from February, while cutting the 2026 growth forecast from 1.6% to 1.2%.
A R54.1bn revenue windfall was almost entirely spent: non-interest spending is R45.5bn higher and debt-service costs are R9.0bn higher. Much of the windfall will not recur.
Only R17.1bn comes from tax; the rest comes from non-tax items, including R10bn from the Central Energy Fund, surrendered cash from public entities and revaluation profits.
Mining drives the corporate tax gain, which Treasury itself considers temporary. The fiscal framework still relies on high metal prices, with gold assumed at $5,039 an ounce by 2029. Fuel levy relief of R3 a litre for diesel and R1.50 for petrol begins on 4 November and costs R10bn, funded by returning money paid to the Central Energy Fund.
Debt is stable but costly.
Gross debt is expected to ease from 78.4% of GDP in 2025/26 to 78.2% in 2026/27 and 76.6% by 2029/30, yet interest costs of R441.5bn, or R1.2bn a day, exceeds spending on health or basic education.
The largest quantified risk is the Social Relief of Distress grant: if the Supreme Court of Appeal upholds the High Court’s finding, the annual cost could rise from about R36bn to R74bn.
Hattingh also highlights that unemployment reached 33.6% in the second quarter, that electricity distribution reform, Transnet’s rail restructuring and the water regulator are all behind schedule, and that the defence budget will shrink by about 5% in real terms by 2029/30.
Hattingh concludes that “the fiscal stability and credibility that National Treasury and the South African Revenue Service have achieved is tangible and deserves credit”, but cautions that “fiscal discipline buys a lower interest bill” without by itself raising investment and growth. He expects Treasury to maintain the deficit target in February 2027, though whether it can do so without new taxes depends on the social grant ruling, oil prices, and tomorrow’s local elections.
What to watch for in the 2026 US midterms
Ofentse Donald Davhie, research associate at the CRA, previewed US midterms, arguing that Democrats were favoured to take at least the House but that a Democratic Congress offers South Africa little real relief from an administration that acts through executive power.
Davhie argues that the war US President Donald Trump launched against Iran in February sets this midterm apart. Petrol averages $4.47 a gallon, compared with $3.14 a year ago; diesel has passed $6.50, and inflation reached 3.7% in September.
The latest Fox News poll reflects this pressure: 77% disapprove of Trump’s handling of inflation, and his approval among registered voters stands at 36%, his lowest in either term.
Democrats led the generic ballot by 54% to 45% in the same poll. Davhie cautions, however, that polls typically miss by around three points and have mostly underestimated Republicans since 2016.
Control of Congress depends on the competitive races.
In the Senate, Republicans hold 53 seats and Democrats need 51 for control, with seven toss-ups – Alaska, Texas, Ohio, Iowa, Kansas, Maine, and Michigan – set to decide the chamber. In the House, Democrats need four of 21 toss-ups to reach 218 seats, while Republicans are defending 34 of the 46 competitive races.
Historically, the president’s party has lost House seats in 20 of the past 22 midterms since 1938.
Davhie sets out three scenarios. The most likely is a Democratic sweep, with the Silver Bulletin model giving Democrats a 75% chance in the Senate and 94% in the House. This would bring investigations of the Iran war and tariffs and a risk of government shutdown, while Trump governs by executive action. The main alternative is a Democratic House and a narrowly Republican Senate, if the polls overstate Democrats by three to four points. The unlikely but not negligible case is Republicans holding both chambers, most plausibly if a ceasefire reopened Hormuz and lowered petrol prices.
For South Africa, Davhie cautions that “Pretoria will be tempted to read a Democratic Congress as relief”, but argues that any relief would be limited. Every instrument used against the country, including Executive Order 14204, the 12.5% Section 301 tariff and the visa restrictions, has been imposed through executive power.
Overriding a veto would require a two-thirds majority in both houses, which no plausible election result would deliver. He concludes that “South Africa is unlikely to be a priority in that fight”, advising readers to treat the 12.5% tariff as a cost on value-added exports to the US until at least 2029 and to watch the African Growth and Opportunity Act determination due this month.
Two years of the GNU: markets have moved, but the economy hasn’t
Hattingh takes stock of the GNU two years on, concluding that financial markets have rewarded South Africa for reform and fiscal discipline that have not yet appeared in jobs or output.
Markets have sharply repriced South Africa’s risk since June 2024. The rand has strengthened from about R18.80 to the dollar to about R16.50, while the yield on the R2,035 government bond has fallen from about 12.2% to about 8.6%. The bond yield premium over US Treasuries has halved, from about 770 basis points to about 360, even with US yields near their highest in more than two decades.
Credit default swap pricing has also halved, the JSE All Share is about 41% higher, Fitch and S&P have both upgraded the sovereign, and Moody’s has moved its outlook to positive.
These gains do not immediately translate into lower borrowing costs.
Hattingh explains that most government debt is long-dated and fixed-rate, so the interest bill falls only as debt is refinanced. Household and most business loans, meanwhile, are priced off the repo rate rather than bond yields, so the benefits reach households slowly.
This year has also brought a partial market reversal: the JSE is about 16% below its February record, and the rand has weakened from R15.90 in late February. The Reserve Bank has raised the repo rate twice since May, to 7.25%, as inflation has moved above the top of its 2% to 4% target range.
The domestic picture is more stubborn. Debt-service costs still absorb about a fifth of revenue (20.7% in 2026/27), the same share as in 2023/24, but have risen in rand terms from R356bn to R441bn a year.
Gross debt peaked at 78.4% of GDP in 2025/26, up from 73.9% in 2023/24 and more than three percentage points above the 75.3% peak Treasury projected in February 2024.
The MTBPS projects a decline to only 76.6% by 2029/30.
GDP contracted by 0.2% in the second quarter of 2026, ending six quarters of growth, while unemployment of 33.6% is slightly above its level at the 2024 election.
Hattingh distinguishes these domestic weaknesses from this year’s market reversal, which he attributes to global conditions: the energy shock and higher US yields. He concludes that “South Africa’s fiscal and growth picture is a domestic problem, and a more stubborn one”. He adds that “markets are therefore pricing in reform and fiscal discipline that have yet to show up in jobs and output”.
For more on the CRA’s products and services, which include Risk Alerts and Strategic Intelligence Briefings, contact Chris Hattingh: chris@cra-sa.com
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