Momentum on world’s 2025/26 money map

The roller-coaster quarter for markets is coming to a tumultuous end, with President Donald Trump's disruptive trade policies and fears of stagflation driving investors towards risk aversion. The global economic landscape is facing a wave of uncertainties that are significantly influencing South Africa's growth and stability. Sanisha Packirisamy, Chief Economist at Momentum, provides insight into the challenges and opportunities that lie ahead. Trump's presidency has been marked by a flurry of executive orders, disrupting the global environment and leading to a pullback in optimism. The Organization for Economic Cooperation and Development (OECD) has revised its global growth projections downwards, from 3.3% to 3.1% for the current year, with further implications for 2026. Protectionist measures are expected to impact growth not only in the short term but also in the coming years, affecting regions like the U.S., Europe, and China. While the U.S. economy was experiencing robust growth, recent indicators suggest a shift towards a more uncertain future. The Federal Reserve has downgraded its growth forecast for the U.S. from 2.1% to 1.7%, reflecting slower consumer spending and factory output. These developments, coupled with escalating trade tensions, are likely to have global repercussions, with inflationary pressures rising. While Europe anticipates a lift in economic growth due to increased fiscal spending, other regions face challenges in navigating the complex economic landscape. The specter of stagflation looms large, pushing central banks towards a delicate balancing act. As global fund managers foresee a stagflationary environment, concerns mount over the intersection of subdued growth and elevated inflation. The Federal Reserve finds itself in a precarious position, observing the unfolding dynamics amidst heightened uncertainty stemming from policy decisions. The prospect of higher inflation poses a significant challenge for central banks worldwide, given the elevated starting point of inflation levels. In this context, higher inflation may trigger difficult policy decisions, impacting global equity markets and economic stability. The uncertain global economic environment reverberates across South Africa, as the country grapples with both local and international headwinds. Despite local reforms in key sectors like energy and logistics, South Africa remains vulnerable to global trade disruptions. The withdrawal of preferential trade agreements and potential tariffs could hamper external demand and dampen growth prospects. The country's growth estimate of 1.6% for the year faces downward risks due to the prevailing global challenges. Consumer sentiment in South Africa reflects the broader economic concerns, with recent surveys indicating a dip in confidence. Factors such as tax policy changes and geopolitical uncertainties have weighed on consumer outlook, particularly among upper-income earners. However, a more comprehensive analysis of consumer sentiment is required to gauge the true sentiment among different income groups. Overall, South Africa's growth trajectory is influenced by a complex interplay of global and local factors, requiring agile policy responses and strategic interventions to navigate the uncertainties ahead.