Things will get much worse in South Africa

Award-winning economist Dawie Roodt said South Africa is in deep trouble and people should expect it to get much worse.

Roodt shared his views during a Jacaranda FM interview about the impact of increased tariffs from the United States on South Africa.

2 April 2025, United States President Donald Trump announced a global 10% tariff on all imports and higher rates for the worst offenders, including South Africa.

Shortly after these levies took effect, Trump announced a 90-day pause for countries hit by higher United States tariffs. The only exception was China.

Although it is unclear what Trump’s ultimate goal is, and how it will play out, Roodt said the world will look very differently due to these changes.

In the short term, the global economy will suffer, and many economists warned that it may go into a recession. The United States economy will also struggle to grow.

Slower economic growth is bad news for all countries, including South Africa, which has a very small and weak economy.

The higher tariffs and a potential trade war can also cause inflation, which, in turn, will result in higher interest rates. This is also bad news for the economy.

“Whatever happens in the global economy and in the United States will also impact South Africa,” Roodt said.

He added that the South African economy is already in a poor state as it has been mismanaged for many years.

“South Africa’s infrastructure is deteriorating. The state-owned enterprises and local authorities are collapsing, and state finances are a mess,” he said.

Roodt added that South Africa’s economic growth will be much slower than Finance Minister Enoch Godongwana’s prediction of 1.8%.

“My estimates were initially that South Africa’s economy would grow by 1.5%. However, I adjusted it downwards to 1% or even less due to the latest developments,” he said.

South Africa may even dip into a recession, depending on the impact of the United States’ tariffs and the impact on global growth.

“We were already in deep trouble, and things will get much worse because of the recent global developments,” Roodt said.

Dawie Roodt’s advice to South Africans

In these times of political and financial uncertainty, many South Africans consider selling their assets or leaving the country. Roodt said it would be a mistake to make hasty decisions.

“Many people panic after what has happened in South Africa over the past week. They want to sell their assets and leave the country. This is the wrong approach,” he said.

The right approach is to identify all the risks the recent turmoil poses to you and your industry, and not to complicate matters further.

“One thing which will make your life even more difficult is if you decide to suddenly sell all your assets,” he said.

“It is much better to stay where you are. There are still many assets in South Africa which produce great returns.”

Roodt explained that South Africa’s equity market is still attractive and that the capital markets continue to offer good value.

He explained that the local and international financial markets are currently very tumultuous, which can scare some investors.

Another challenge is that the rand is trading at much weaker levels than fair value, which Roodt said is around R17 per US Dollar.

To move money offshore now can result in currency losses, unless the person invests in the international market long-term.

His advice is not to make hasty decisions, and to get a qualified financial advisor to assist during these tumultuous times.