
Global unrest has been brought on by Donald Trump’s return to the presidency, but in order to strengthen the economy, President Cyril Ramaphosa and his Government of National Unity (GNU) must prioritize local issues.
“At the moment, Trump policy is the biggest unknown of 2025,” Mike van der Westhuizen, portfolio manager at Citadel, stated.
“Whether the bark is bigger than the bite is the key question surrounding US policy.”
He asserted that our new Government of National Unity (GNU) must take action in order to address the systemic problems in the South African economy, which is something we can control despite the external uncertainties.
According to Van der Westhuizen, South Africa’s economy is predicted to increase by 1.8% annually on average over the next several years.
However, in order to sustainably grow the nation out of its unemployment problem and unstable but improving budgetary position, it must grow closer to 3%.
He stated that it is time to transform the significant increase in support for the GNU into tangible action in order to revive the economy.
Actual economic improvement has been mediocre, despite the fact that numerous ministries are pressing forward with new and improved initiatives.
According to him, the government needs to start acting more significantly and effectively in order to live up to its rhetoric.
The reprieve from load shedding has been a huge boon to energy security. Van der Westhuizen stated that more work must be done to guarantee energy security in the long run.
“Our export industry depends on fixing the rail and port problems, which have resulted in lost trade revenue.”
“There are additional issues that need immediate attention, such as water security and municipal decay.”
“The GNU now has the ideal opportunity to disprove the skeptics, as policy execution has impeded progress in the past.”
Energy prices are remain high, and worldwide inflation is rising even though South Africa’s inflation rate is modest (3.0% in December).
However, South African inflation is expected to be below historical highs, which will provide the South African Reserve Bank with
Inflation in South Africa should continue to be “well behaved,” he added, allowing the SARB to lower interest rates two or three times in 2025.
The majority of analysts anticipate that the Reserve Bank’s Monetary Policy Committee will lower rates when it convenes next week, despite the fact that many experts are still unsure about the inflation outlook.
A few encouraging indications
Maarten Ackerman, Chief Economist at Citadel, pointed out that many of Donald Trump’s expected initiatives have already been priced in by markets, despite his concerns.
As a result, the market responded right away to his inauguration on January 20, 2025.
However, it is anticipated that rising markets like South Africa may be impacted by suggested measures, such as increased trade duties on China.
He went on to say that trade wars might put pressure on the rand and impede global economy.
However, as a major commodity exporter, South Africa may profit from strong Chinese economic stimulation.
Ackerman also said that there are risks to risks related to the African Growth and Opportunity Act (AGOA), which is crucial for South Africa’s automotive sector, among other things.
Ackerman also flagged risks related to the African Growth and Opportunity Act (AGOA), which is crucial for South Africa’s automotive sector and others.
The reduction in AGOA benefits could thus hurt South Africa’s few growing manufacturing sectors, which could have a serious impact on GDP and jobs.
Moreover, Trump’s policies are set to boost the US dollar, which will put further strain on South Africa’s growth partners.
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