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# The GNU and the Iran war are the two big levers that could decide South Africa's next move
- URL: https://www.businessbagel.com/gnu-iran-war-two-big-levers-south-africa/
- Published: 2026-11-13T03:30:00.000Z
- Updated: 2026-11-13T03:30:00.000Z
- Description: All Weather Capital sees a stable GNU and peace in Iran as South Africa's best case, and a GNU collapse with escalation in the Gulf as the worst.
- Author: Christian Maidman
- Tags: Economy, Business Bagel News

There are two things that could have a massive impact on South Africa's economy over the coming months, and it helps to imagine them as two levers. The first is whether the government of national unity holds together after this month's municipal elections. The second is the war in Iran, now in its ninth month, and whether it escalates or winds down. Depending on which way each one moves, the outlook for our economy changes quite dramatically, and on Thursday the All Weather Capital team set out what each combination could mean.

## The GNU lever

New councils now have to form, and under the Municipal Structures Act, the first meeting of each one must be convened within 14 days of it being declared elected. Coalition talks can complicate that, and parties can ask for the mayoral vote to be postponed while negotiations continue. For investors, though, the bigger issue is what it all means for the GNU itself. As Rajeev De Mello of Gama Asset Management told Bloomberg, the key question is less about individual municipal results and more about what they signal for the GNU and the direction of national economic policy.

Since the GNU was formed, All Weather says foreign investors have bought around R220 billion of our bonds. That kind of demand has helped bring borrowing costs down. South Africa's 10-year government bond yield fell to a record low in February as investors warmed to the coalition government's economic programme, and foreigners lifted their share of fixed-rate bond holdings to 32%. But pull this lever towards the GNU collapsing, and All Weather expects the rand to get much weaker and government borrowing costs to climb much higher as foreign investors pull out. It doesn't see that as the most likely outcome, but says it's something we need to be aware of.

## The Iran lever

The second lever has already cost us. South Africa is a net importer of crude oil and finished petroleum products, and since the war broke out in late February, petrol has risen more than 48% while diesel costs over 66% more. It hit our bond market too: in March, the war sparked the biggest outflow from South African bonds in at least six years, with foreigners selling a net R41.3 billion of government bonds in a single week. Lately, there's been some relief. Brent crude has fallen to about $91 a barrel, from nearly $117 at the end of October, although there's been little sign of real progress towards ending the conflict.

Pull this lever towards peace, and All Weather believes Brent could fall to about $75 a barrel, with a weaker dollar helping oil importers like us. Economist Elize Kruger told Business Day that if oil prices stay at these lower levels through November, substantial fuel price cuts could follow in December and January. But pull it towards escalation, and All Weather sees oil potentially climbing back to between $110 and $135 a barrel, or higher if there's significant damage to infrastructure. For a country that relies on imported oil, that's an enormous difference.

Now imagine both levers moving in the wrong direction. All Weather calls the combination of escalation in Iran and the GNU ending by far the worst-case scenario, with a weaker rand, higher borrowing costs and dearer oil arriving all at once. Move both levers the other way, with a peace deal and the GNU holding, and that's All Weather's best case, because it says oil importers like South Africa do very well when there's peace. Neither lever is entirely in our hands, but between them, they set the range of outcomes we're facing.

Views quoted from All Weather Capital are their own and not financial advice. All Weather Capital is an Authorised Financial Services Provider (FSP 36722). Full disclosures are available at allweathercapital.co.za.