The latest TreasuryONE and ETM Analytics webinar provided a deep dive into the significant economic and geopolitical shifts shaping markets as the year nears its close. Hosted by Ilze Marie Le Roux, the discussion featured insights from George Glynos, Director of ETM Analytics, and TreasuryONE’s Head of Risk Management, Wichard Cilliers.
Trump’s Return and Its Economic Implications
Donald Trump’s re-election as U.S. President dominated the conversation, with the panel highlighting its far-reaching impact. George noted the uncertainty surrounding Trump’s policies, including potential tariff increases, tax reforms, and cuts to government spending.
While tax cuts could stimulate economic growth, they risk ballooning the U.S. budget deficit, which is already exceeding 6% of GDP. Trump’s approach to trade relations and immigration also raises questions. While tariffs may rebalance trade, they could trigger inflationary pressures.
Similarly, the mass deportation of undocumented immigrants could tighten labour supply, potentially impacting consumptive growth and prices. The geopolitical landscape is equally precarious. Escalating tensions in Ukraine and the Middle East, coupled with Trump’s potential foreign policy shifts—such as reconsidering U.S. involvement in NATO—add layers of complexity. “The Trump trade may boost the dollar in the short term, but its long-term effects remain uncertain,” Wicard added.
South Africa: Rate Cuts and a Strengthening Rand:
SARB cut interest rates by 25 basis points, aligning with expectations. Inflation remains well below the SARB’s 3-6% target band, with further cuts anticipated in the coming months. However, SARB Governor Lesetja Kganyago’s cautious approach hints at a long-term goal of reducing the inflation target to 3%.
The Rand has faced volatility, oscillating between R17.90 and R18.30 against the U.S. dollar. Despite recent setbacks—partially driven by the “Trump effect”—the Rand remains one of the year’s best-performing currencies. The panel emphasised that local factors, such as South Africa’s Government of National Unity (GNU), continue to bolster investor confidence.
Global Risks and Opportunities:
China’s economic slowdown, driven by high youth unemployment, a struggling property sector, and ongoing trade wars, poses risks to South Africa as its largest trading partner. However, George suggested that South Africa could mitigate these challenges through domestic reforms, particularly by investing in infrastructure and fostering private sector involvement.
Looking ahead, the panel urged businesses to brace for ongoing volatility. “Volatility creates opportunities,” Wichard noted, stressing the importance of robust risk management strategies. While the geopolitical and economic landscape remains unpredictable, cautious optimism for South Africa’s economic trajectory prevails, thanks to structural reforms and stabilising inflation.
As the webinar concluded, the panellists agreed on one certainty: the coming months promise to be anything but predictable. “Hold on to your bootstraps – it’s going to be an interesting ride.”