Global headwinds likely to put pressure on SA's economy, says Godongwana

JOHANNESBURG - Finance Minister Enoch Godongwana has warned that global headwinds could continue to pile pressure on South Africa, affecting what appears to be a more optimistic economic outlook.

Godongwana made the warning while delivering his 2025 Budget Speech in Cape Town on Wednesday.

While some domestic conditions have shown a slight improvement, there are still concerns that the spillover effect from geopolitical and geo-economic tensions could affect the South African economy.

This includes threats of trade wars spurred by the return of Donald Trump as u-s president last month.

Domestically, a continued stable electricity supply and progress in reforms, could boost business and investor confidence.

But in the same breath, logistical challenges remain a constraint on output, investment, and economic growth.

ALSO READ:

• FULL SPEECH: The 2025 Budget Speech

• Godongwana tables 2025 budget, gives reality check on underperforming economy

• SRD grant extended for another year; old age, foster care grants increase

• Godongwana hikes excise duties on alcohol & tobacco products

A faster-than-expected easing in interest rates and inflation, and withdrawal from the top pot system are among factors expected to boost consumer spending, giving the economy a much-needed injection.

While domestic risks are mostly balanced, the global risks skewed to the downside are hard to ignore.

Said Godongwana: “Maintaining macroeconomic stability, inclusive of prudent fiscal policy, promotes stable prices, lowers interest rates and enhances the country’s resilience to external shocks."

With hopes the country will be able to absorb global shocks better, some economists hope the GNU will live up to expectations to jumpstart the economy.

Some early signs that the improved sentiment is paying off include improved bond yields and elevated stock prices on the Johannesburg Stock Exchange.