South Africa is the country that has the ‘most to lose’ with Trump’s new policies

·8 May 2018

President Donald Trump’s policies threaten to throw oil prices, US rates, and trade flows out of whack, according to a new report by Bloomberg Economics which ranked 15 major emerging markets to see which is the most vulnerable to rising oil prices, US rates and protectionism.

The report found that South Africa stand out as having most to lose – primarily because of its combination of oil imports and current account deficit.

In comparison, BRICS partners Russia and Brazil come out looking the most resilient, according to the report.

Despite the potential impact on South Africa, the Federal Reserve’s gradual push towards higher interest rates shouldn’t be blamed for any roiling of emerging market economies, which are well placed to navigate the tightening of U.S. monetary policy, Fed Chairman Jerome Powell said on Monday.

In a speech that argued US decision-making isn’t the major determinant of flows of capital into developing economies, Powell said the influence of the Fed on global financial conditions should not be overstated, despite it being blamed five years ago for the so-called taper tantrum.

“There is good reason to think that the normalisation of monetary policy in advanced economies should continue to prove manageable for EMEs,” Powell said at a conference sponsored by the International Monetary Fund and Swiss National Bank in Zurich on Tuesday.

“Markets should not be surprised by our actions if the economy evolves in line with expectations.”

The remarks come as investors bet against emerging markets amid concerns about Fed policy. The dollar has soared against most developing-nation currencies in the past month.