BNP Paribas slashed its economic growth for South Africa because of domestic political uncertainty and US President Donald Trump\u2019s tariff war.<\/p>\n\n\n\n
Africa\u2019s most industrialised economy is only expected to expand 1% this year, compared with a previous forecast of 1.6%, Jeffrey Schultz, an economist at BNP Paribas, said in a note.<\/p>\n\n\n\n
\u201cWe had flagged that an improving domestic fundamental reform agenda in South Africa would likely trump external risks,\u201d he said. \u201cWe no longer believe this to be the case.\u201d<\/p>\n\n\n\n
A dispute between the two main partners in South Africa\u2019s coalition government \u2014 the African National Congress and the Democratic Alliance \u2014 over this year\u2019s proposed budget has fractured the alliance and increased uncertainty. <\/p>\n\n\n\n
Talks aimed at resolving the impasse will continue in Johannesburg on Saturday.\u00a0<\/p>\n\n\n\n
\u201cNone of this, we think, is particularly conducive to a meaningful short-term pick-up in growth in domestic fixed investment, which is already struggling amid low levels of business confidence,\u201d Schultz said.<\/p>\n\n\n\n
He also said \u201cSouth Africa\u2019s transport and logistics infrastructure now looks unlikely to bear fruit until 2026 given a more complicated regulatory backdrop for Transnet SOC Ltd.,\u201d the nation\u2019s frayed port and rail operator. <\/p>\n\n\n\n
US tariffs further represent a headwind that will deal both a direct and indirect blow to South Africa.<\/p>\n\n\n\n
The current effective US tariff on South Africa is close to 11%, with autos and agriculture likely to be the hardest hit industries, according to Schultz. <\/p>\n\n\n\n
If an initial 30% reciprocal tariff proposed by Trump comes into effect, the effective rate will increase to 16%, he said.<\/p>\n\n\n\n
The US tariffs also threaten to dent growth in some of South Africa\u2019s largest trading partners, particularly China.<\/p>\n\n\n\n
\u201cSouth African economic activity will not only be hit an indirect blow through weaker external demand globally, it also faces the direct hit of one of the highest reciprocal tariffs imposed globally\u2014on paper at least\u2014of 30%,\u201d Schultz said.<\/p>\n","protected":false},"excerpt":{"rendered":"
BNP Paribas slashed its economic growth expectations for South Africa. <\/p>\n","protected":false},"author":59,"featured_media":656761,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[11538,20009,853],"class_list":["post-820685","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-government","tag-bnp-paribas","tag-gnu","tag-south-africa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/820685","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=820685"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/820685\/revisions"}],"predecessor-version":[{"id":820686,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/820685\/revisions\/820686"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/656761"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=820685"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=820685"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=820685"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}