Donald Trump has won the United States presidential battle. The Republican pipped his Democrats counterpart, Kamala Harris with 51% of the votes.
South African President, Cyril Ramaphosa, joined leaders around the world in congratulating the US President-elect on his return.
"I look forward to continuing the close and mutually beneficial partnership between our two nations across all domains of our cooperation.
"In the global arena, we look forward to our Presidency of the G20 in 2025, where we will work closely with the US who will succeed us in the G20 Presidency in 2026," Ramaphosa said.
What does a Trump victory mean for South Africa?
"For a country like South Africa, former president Trump's win could have some positives but also some less favourable implications for our domestic economy," said Aluma Capital economist, Frederick Mitchell.
He said the South African rand is sensitive to US economic policies, market movements and US sentiment towards emerging markets.
Mitchell said aggressive trade actions from the US may trigger a depreciation of the rand, complicating the import landscape while driving up import prices as a result.
"Conversely, anticipated investment and trade could strengthen the currency, contingent on the US market's response to Trump's policies,“ he added.
Here are the PRO's
- Positive outlook on economic growth: Mitchell said under Trump, the US economy experienced robust growth, with a 2.5% annual GDP increase in his final year.
"A return to similar pro-business policies could foster favourable trade dynamics, benefiting South Africa and other emerging markets in the medium term," he said.
- Increased investment opportunities: Mitchell explained that Trump's focus on deregulation and tax cuts could encourage increased US investment in South Africa, boosting local industries and creating jobs in a nation grappling with over 34% unemployment.
- Continuation of the African Growth and Opportunity Act (AGOA) agreement and benefits associated with it: Mitchell said the AGOA has provided significant advantages for South Africa, enabling duty-free access to US markets.
"A Trump administration might reinforce or expand these trade agreements, strengthening economic ties," Mitchell said.
- Newfound stability in trade policies: Mitchell said Trump’s assertive approach could result in clearer, more predictable trade policies, allowing South African exporters to plan their long-term strategies with greater assurance.
Here are the CON’s
- Increased US protectionism and tariffs: "Trump's known protectionist stance could lead to increased tariffs on imports, adversely affecting South African goods entering the US market and straining the economy," Mitchell said.
Continued global economic uncertainty: According to Mitchell, an erratic presidency could foster instability in global markets, leading to currency volatility.
"Should aggressive trade measures be implemented, the rand could depreciate notably in a short time frame and thus potentially could have adverse effects on import prices and volumes and ultimately lead to further inflationary pressure within South Africa," Mitchell said.
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