Last week, global markets grappled with heightened uncertainty as the US faced a looming federal government shutdown. In South Africa, there is also uncertainty, as the African Growth and Opportunity Act (AGOA) nears its expiry, while Eskom and Transnet progress is not yet translating into improved GDP numbers.
International Market Developments
The OECD revised its 2025 global growth forecast upward to 3.2% from 2.9%, though 2026 remains at 2.9%. Growth in 2024 was resilient at 3.3%, but higher tariffs and policy uncertainty are expected to weigh on trade and investment, with firms absorbing some costs through margins.
Federal Reserve voices signal caution. Richmond’s Tom Barkin sees limited inflation and unemployment risks, aiming to “land the plane” on both. Dallas’ Lorie Logan questions the fed funds rate’s relevance, advocating a shift to repo-based benchmarks to ensure policy efficacy. Kansas City’s Jeff Schmid calls the current stance “slightly restrictive,” while Chicago’s Austan Goolsbee urges gradual rate cuts to clear “stagflationary dust.” Fed Chair Jerome Powell notes “upside inflation risks” and “downside employment risks,” with equities “fairly highly valued” but no major stability threats.
A looming US federal government shutdown, with a Wednesday midnight deadline, has lawmakers scrambling for a stop-gap funding bill to extend operations until mid-November. Shutdowns are costly, halting public services and furloughing workers. A key sticking point is the Affordable Care Act’s tax credits, expiring year-end. The last shutdown, a 35-day record in Trump’s first term, disrupted markets and data releases, like September’s payrolls report due Friday.
Local Market Developments
Locally, The B4SA Business Government Partnership reported significant progress at Eskom and Transnet, but GDP growth remains below 1%. Structural load shedding has dropped 98% since 2023, with 6GW of new energy generation added. Eskom’s energy availability factor reached 62%, and Transnet Freight Rail achieved 7.4% growth to 160Mt, with a 171Mt target for 2026. B4SA aims for 3% growth by 2030, supported by R1.3 trillion in energy investments and reforms like the SA Wholesale Electricity Market.
The US signals support for extending the African Growth and Opportunity Act (AGOA), set to lapse today after a 2015 10-year renewal. It acts as a cornerstone of preferential trade access for sub-Saharan nations. Trump’s tariffs have often overshadowed AGOA, but adviser Massad Boulos affirmed alignment with its goals. A one-year extension enjoys White House backing, pending Congressional approval, with historical precedent for retroactive renewals offering hope for African exporters.