Improving economy faces pressure from global uncertainty

However, according to the Q1 2026 Mobility Report by TransUnion, that momentum has been interrupted by renewed geopolitical tensions and rising energy prices, creating a more uncertain outlook for the remainder of the year.

The report notes that the country's economic environment strengthened during the opening months of 2026. Inflation had moderated, interest rates had declined from previous highs, load shedding disruptions were limited and financial market conditions improved.

These developments helped strengthen household finances and supported consumer spending, while gross domestic product expanded by 1.1 per cent during 2025 and reached year on year growth of 1.9 per cent in the first quarter of 2026.

That positive backdrop has since come under pressure following escalating conflict in the Middle East, which has disrupted global energy markets. Higher oil prices are beginning to filter through to the South African economy, increasing fuel and transport costs and creating fresh inflationary pressure. As a result, economic growth forecasts for 2026 remain around 1.1 per cent, reflecting a more cautious outlook.

Inflation, which had eased earlier in the year, has accelerated to 4 per cent, with the report warning that risks are increasingly weighted to the upside. This has introduced greater uncertainty around monetary policy, with markets expecting a less supportive interest rate environment if inflationary pressures continue to build. Higher borrowing costs, combined with rising fuel prices, could reduce household purchasing power and place additional pressure on discretionary spending during the second half of the year.

These changing economic conditions are expected to affect the mobility sector directly. Although households remain in a stronger financial position than during previous downturns, supported by earlier interest rate relief and stronger wealth effects, increasing fuel costs are likely to raise both vehicle ownership and operating expenses. The report also highlights that transport related costs, logistics expenses and other operating costs across the mobility sector are expected to come under greater pressure.

Against this backdrop, affordability is expected to play an even greater role in purchasing decisions. Consumers may increasingly favour lower cost mobility options, used vehicles and alternative ownership models as they seek to manage tighter household budgets.

The report also notes that lenders and other mobility businesses are entering a different phase of the economic cycle. Rather than operating in an environment of steady recovery, they are facing one characterised by greater uncertainty, rising cost pressures and changing credit risk dynamics.

While opportunities for growth remain, the report suggests that resilience planning and careful monitoring of affordability trends will become increasingly important as macroeconomic conditions continue to evolve.