Standard Bank: Trade & policy uncertainty undermining global growth

South Africa's path to economic recovery is poised for suspense, but it is also one that is clad in hope. This is according to the Standard Bank 2025 Economic Outlook presented by the Chief Economist Goolam Ballim at the Bank's offices in Johannesburg. In a recent interview with CNBC Africa, Ballim shared insights into the positive underpinnings for an improving growth picture for South Africa and the world by 2025 and beyond. Ballim highlighted the shift in the political landscape in South Africa as a key driver of optimism. He noted that the political climate has moved away from suppressing growth and risk-taking to embracing reform and stability. The formation of the Government of National Unity has brought increased emphasis on the reform agenda, leading to a sense of optimism among households and businesses. This, combined with factors like easier interest rates and growth in real wages, is expected to drive faster household spending and fixed investment in the coming years. Looking ahead to 2026 and 2027, Ballim expressed confidence in the acceleration of growth, with a possibility of breaching 3% in the outer years. He emphasized the importance of the reform agenda, particularly in sectors like ESCOM, Transnet, and water, in sustaining this growth trajectory. One of the key pillars supporting South Africa's economic outlook is the Government of National Unity. Ballim pointed out that President Ramaphosa and John Stuart Nielsen's alignment of interests and focus on boosting South Africa's prosperity have kept the coalition intact. Survey data showing public support for the GNU further reinforces its stability and effectiveness. Ballim also highlighted the role of an effective cabinet in driving economic progress. He cited examples of ministers like Senzo Mtunu in the police department and Dr. Ramachoba in the energy sector, who have made significant contributions to positive outcomes such as declining crime rates and stable electricity supply. Addressing concerns about the upcoming budget, Ballim debunked notions of fiscal slippage and highlighted the government's efforts to contain expenditure and manage the debt to GDP ratio. While acknowledging risks related to state-owned enterprises needing funding, he expressed confidence in the treasury's ability to navigate these challenges. Shifting focus to the global landscape, Ballim painted a picture of a multipolar world where the United States' influence has waned. He discussed President Donald Trump's efforts to reshape global dynamics through what he termed as 'muscle diplomacy,' cautioning that these actions could potentially hasten America's decline on the world stage. In conclusion, Ballim emphasized the importance of South-South cooperation and alliances for African nations in the face of unfolding global geopolitical shifts. He highlighted the evolving nature of instruments like AGOA and the need for African countries to navigate the changing dynamics of international relations. As South Africa charts its course towards economic recovery, the insights shared by Standard Bank's Chief Economist offer a glimpse into the challenges and opportunities that lie ahead. With a focus on political stability, reform agendas, and global dynamics, the path to prosperity appears promising, albeit with its share of uncertainties.