Can SA take advantage of shifting global tides?
By Chris Hattingh
The latest World Economic Forum meeting in Davos, Switzerland, produced a stark, necessary contrast between two emerging philosophies of foreign policy and of geoeconomic strategy.
On the one hand, Canadian prime minister Mark Carney’s address drew widespread praise. He expressed concerns about the decline of the rules-based order, and the need for “middle powers” (including South Africa) to work together to fill the emerging gaps in a positive manner.
By contrast with Mr Carney’s speech, US President Donald Trump struck a decidedly America First tone, hyping his administration’s achievements in his second term, and painting in stark images the US’ economic and regional strategic ambitions. Thus, the two paths presented to the world are multilateralism versus unilateralism.
In this maelstrom of geopolitical and geoeconomic changes South Africa finds itself hopeful for 1.4% GDP growth in 2026 (tripling the growth rate from 2024). The Government of National Unity remains relatively stable, the lights stay on most of the time (not for very many citizens), but better than in 2023 and into 2024. There’s talk of reform, but most South Africans are not yet seeing it in reality. A key question is whether the country’s economic improvement is due to domestic factors and those reforms, or more the consequence of higher gold and commodities prices, the consequence of heightened global uncertainty and a weakening US Dollar.
The upcoming State of the Nation address by President Cyril Ramaphosa, set to be delivered on 12 February, and the main Budget, scheduled to be delivered by Minister of Finance Enoch Godongwana, will be watched for 1) the country vision the president offers to citizens and 2) how well the government is managing its finances. On the former, the president faces a serious struggle; ever more citizens have become disinterested (at best) and completely disengaged with South African democracy and the political options available.
Regarding the latter, markets and investors will watch to see whether the government can manage its relatively more responsible spending path, while still investing in infrastructure, the social wage, and other priorities where needed. Markets have already rewarded the government’s better fiscal path over the last 24 months, with the declining yield on government bonds also boosting appetite for South African debt and assets.
In both the SONA and Budget the main, most impactful takeaway will be how the South African government sees and is willing to act to shore up the country’s weaknesses and build on strengths. Doing so would require some radical introspection and honesty; not flowery rhetoric, many adjectives, commitments, and promises, and the usual script to which South Africans are subjected.
Regardless of whether the Carney-ian or Trumpian vision and path ultimately plays out, South Africa will be able to better weather coming storms through improved economic activity, investment, and output, and the rebuilding of strategic enablers such as the South African National Defence Force (especially of the navy).
In his World Economic Forum address Mr Carney leaned on insights from Václav Havel. The latter’s hallmark was “living in truth.” South Africa’s leaders, policymakers, politicians and intellectuals will do the citizens no favours if they persist with feel-good speeches and indulgences, instead of the politically difficult but ultimately necessary decisions and reforms that would place the economy on a healthier path.
