If global trade relations continue to sour, govt must brace for trouble, warns Godongwana
Since the budget review in March, greater uncertainty and trade fragmentation have contributed to a weaker economic outlook.
US President Donald Trump (L) is set to meet South African President Cyril Ramaphosa (R) in the White House. Picture: AFP
JOHANNESBURG - Finance Minister Enoch Godongwana says the government must brace for the worst-case scenario if global trade relations continue to sour.
While a South African delegation is meeting with US President Donald Trump in Washington on Wednesday, fears of the impact of global trade tensions on the economy also made their way into Godongwana’s budget speech.
He says global risks have seen a downward revision to GDP with the economy now forecast to grow at an average of 1.6 per cent between 2025 and 2027, lower than the 1.8% forecast two months ago.
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Since the budget review in March, greater uncertainty and trade fragmentation have contributed to a weaker economic outlook.
Although South Africa is benefitting from the more stable power supply, structural constraints continue to limit economic growth, and downside risks have broadened.
The global outlook has also deteriorated in the face of greater policy volatility.
Godongwana said, “The most troubling changes are the global economic developments which have, in the short space of two months, already had a significant impact on the domestic economic outlook.”
He says new trade barriers may raise inflation and prolong the cycle of higher interest rates.