Author: Steven Crouse

Despite the challenge of having to get our minds around the fact that it is already August, the year 2025 is certainly delivering news and events at breakneck pace.

The eyes of the world remain transfixed on President Trump’s seemingly endless imposition of tariffs on every US trading partner imaginable, yet capital markets continue to drive ever-upward, breaching new all-time highs for stock markets across the globe during July.

Last week’s report out of the US reflected strong GPD growth for the 12 months to June, exceeding the expected 2.6% by a healthy margin, boosted by both consumer and government -spending, and lower imports ahead of the August 1^st deadline on trade tariffs.

Last week our SARB’s Monetary Policy Committee cut rates by another 0.25%, bringing the total cuts since September to 1.25%, while also surprising the markets by adjusting the MPC’s ‘favoured’ strategy of targeting the lower end of the inflation target band, and aiming to maintain CPI around 3% going forward.

Just what this means for future rate decisions remains to be seen. While Governor Kganyago hinted at further rate cuts as the SARB embarks on this strategic adjustment, the Reserve Bank’s already tough stance on inflation may have gotten even tougher, as so much of our inflation is being driven by supply-side factors, with higher rates not really doing much to curb already weak consumer-spending.

Any slight shock to supply-side costs could easily trigger higher rates ahead, and not the anticipated lower.

The plus-side of the SARB maintaining higher rates (one which we are not entirely convinced is a positive!), is that of propping-up the attractive yields on our bonds and fixed interest assets, making them appealing to foreign investors and, indirectly, protecting the currency.

While admirable, this is NOT the role of the central bank – a growing economy presenting investors with opportunities and reasons with which to invest in your economy are the distinct roles of government’s fiscal and economic policies – not the SARB’s.

Yet, with government’s growing inadequacy and ineffectiveness, tied to an increasingly leftist policy slant, it appears the Reserve Bank are the ones doing the heavy lifting and keeping the good ship SA afloat!

The clearest example of this is our government’s apparent sleepwalking into the tariff disaster –  presenting a ‘brave face’ to the media and the public, while knowing just how hard these proposed penalties on South African imports into the US will hit us… our auto-industry alone predicts the possible losses of 100,000 jobs, let alone agriculture, manufacturing, or mining!

Just another of the countless failed policies and inactions of the ANC, seemingly determined to weaken and destroy the middle class as they pursue their fantasy of the NDR… (If you haven’t read the harrowing pages of this communist-dream that so-clearly directs the policy-framework of Cyril and his cohorts, it is required reading!)

Stupidity, arrogance, and absolutely zero grasp of basic economics… The mind boggles?

Truth is, it’s all really that simple – as the economy falters, so too does the party’s national support – yet another recent poll estimating the flagging fortunes of the ANC now around 30%!

The ANC today is much like a Greek Tragedy – we can all see the hero is going to fail, but he cannot do anything to stop it.  Sadly, the ANC have proven they are incapable of changing the direction of the past 31 years, and so the story unfolds…

If you fail to foster an environment that encourages investment and creates jobs, the living standards and circumstances of your average South African are not going to improve. And as the numbers have shown over the past 15 years in particular, these metrics are almost perfectly correlated to the ANC’s falling support. When GDP per capita peaked under Mbeki’s first term, the ANC topped two-thirds of the vote.

Then came Zuma…

The crazy truth is that the vast majority of Mzanzi’s citizens desperately want a job and the dignity that comes with it. They don’t want a plot of farmland, nor to nationalise Adrian Gore’s business – they want to earn the income that brings with it the affordability of being one of his clients!

So, how long do the voters tolerate this level of tone-deaf government?

That, none of us really knows. But we can all be honest and say that the GNU is better than the ANC running things alone. At least now they can only steal in small portions as the clock (hopefully!) winds down for them, as the DA watches them like hawks. The ongoing tension between our two largest parties was never meant to be love and friendship – it’s about pressure. And pressure equals accountability. Finally!

 

 

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