Citadel Investment Services and Anchor Capital said that the current US presidential elections will have an impact on the South African economy.
George Herman, Chief Investment Officer at Citadel Investment Services said that our relationship with the United States is what's important, not just the outcome of its elections.
“For South Africa, as an open economy reliant on exports, access to the U.S. market is essential. The United States, being the largest consumer-driven economy globally, plays a key role in supporting our exports. In this regard, maintaining our place in the AGOA (African Growth and Opportunity Act) program is vital, as it has faced scrutiny multiple times. “
Herman added that preserving our participation in AGOA is crucial for our economic future. “Secondly, South Africa needs to exit the Financial Action Task Force (FATF) grey list, as it complicates all forms of international business, not only with the U.S. Remaining on the grey list makes it more challenging for foreign investment to flow into South Africa, so addressing this is imperative.”
Herman said that our relationship with the U.S. is absolutely critical. “While U.S. economic growth has been robust, it shows signs of moderating. In contrast, South Africa’s economy appears on the brink of recovery, driven by a wave of positive sentiment post-GNU.”
He added that the impact of the elections differs based on the candidates’ policies. “Mr. Trump’s platform leans towards a more isolationist approach, aiming to strengthen the U.S. internally by closing its borders.
This "America First" stance, while ambitious, could significantly limit trade opportunities for South Africa. Under Mr. Trump, we would likely see more tariffs on imports, with a particular focus on China but potentially extending to other trading partners. This would pose a considerable challenge for South African exports.”
Herman said that Kamala Harris, on the other hand, does not propose policies that directly impact South Africa. “However, given Mr. Trump's trade agenda, it’s clear that his approach could pose greater challenges for our economy.”
Nolan Wapenaar , head of fixed income at Anchor Capital said that Donald Trump is far more protectionist than Kamala Harris.
“Trump is likely to be more aggressive in his policies towards China and more broadly emerging markets in an attempt to bring jobs back to the USA.
This will likely be inflationary for the US at a time that they are at full employment anyway. Nonetheless, his policies are likely to be positive for the dollar and US economic growth in the short term, while emerging markets will find themselves under more pressure as global trade might reduce.”
Wapenaar added he thinks that a Trump victory sees a weaker rand and possibly higher interest rates globally (including in South Africa) in response to increased US debt levels and higher inflation.
“The US is a large trading partner for South Africa and we will need to see the impact of his tariffs on South African trade.”