From goings-on in politics to info drops in the economic world, we’ve got you covered on what to expect this week.
Politics
Trump’s tariffs
Wednesday, 9 July, is the deadline set by US President Donald Trump for major trading partners to strike deals with Washington. It brings to a close the 90-day pause on the reciprocal tariffs that Trump first floated on April 2, aka “Liberation Day”. In our case, the US mooted a tariff rate of 31% on imports from South Africa.
The rand gained last Thursday on optimism among global investors about trade negotiations with the US, following the country’s signing of a trade deal with Vietnam (where imports will be taxed at a rate of 20%), fueling hopes of a similar deal with South Africa in the final days.
This all comes ahead of the BRICS leaders’ summit in Brazil early next week, where the expanded bloc – now including Egypt, Ethiopia, and Saudi Arabia – is expected to sign a joint statement condemning (the US’) “unjustified unilateral protectionist measures” and promising stronger intra-bloc trade ties.
Budget votes
Mini-plenary debates on the Appropriation Bill continue this week. Under Rule 328 and the Money Bills Act, every one of the 42 departmental budget votes must pass before the House can adopt the Appropriation Bill itself. If even one allocation is defeated, the Speaker cannot move the final vote, and the Public Finance Management Act (PFMA) forces departments to operate on a stopgap basis, using 10% of last year’s monthly budgets, until a new Bill is adopted.
By-elections
The DA defends three seats on Wednesday, two in Tshwane and one in Metsimaholo in the Free State. Ward 14 in Metsimaholo and Ward 44 in Tshwane are both relatively safe seats with the DA having recorded above 70% of the ward vote in the 2021 municipal poll.
Ward 98 was more marginal in 2021 with the DA obtaining 42% of the vote with the opposition vote split between the ANC, VF + and Action SA who recorded 16.3%, 14.8% and 13.8% respectively. In the 2024 provincial vote, the EFF ran neck-and-neck with the ANC for second place behind the DA.
Action SA again sits out both Tshwane by-elections with the DA up against the VF+ and ANC in all three wards. The KAM is also fielding a candidate in the Metsimaholo ward, while the One Heart Movement (OHM) is fielding the same candidate in both Tshwane wards. Ward 98 is more crowded: in addition to the DA, ANC, VF+ and OHM, there will also be an independent candidate and an EFF candidate.
Economics
Manufacturing production (May)
South Africa’s May manufacturing print is scheduled to drop on Thursday, 10 July. Last month’s readout was bleak: output shrank -6.3% year-on-year, the worst in more than a year, though a 1.9 % month-on-month bump suggested the sector might be scraping a floor. Eskom’s Stage-2 loadshedding cap and shorter port queues in May will have analysts looking for a flat or slightly positive number to support Q2 GDP growth projections.
Some fiscal cover does, however, loom. Late-June data showed a second consecutive primary budget surplus (R48.9 billion, 0.7% of GDP), marking the first back-to-back surplus in 16 years. That gives the treasury a little breathing room, even if output remains soft. However, another deep contraction on Thursday would undermine the optimism and reignite concerns about stagflation.
Foreign reserves (June)
Monday’s gross and net foreign exchange (FX) reserves figures will give markets a quick health check on the SARB’s buffer. South Africa’s gross FX reserves hit a record $68.12bn in May, buoyed by firm gold prices and a softer dollar.
Monday’s figures will show whether reserves remain solid ahead of the BRICS summit. Two straight primary surpluses mean the SARB shouldn’t have had to use expensive FX swaps, so markets will expect reserves to hold steady. A surprise drop, especially alongside weak manufacturing data, could weaken the rand and shake confidence in the treasury’s debt-stabilisation plan.
This article was originally published by The South Africa Brief, a political newsletter published on Substack which is a collaboration between Paul Berkowitz and Jonathan Moakes. It provides analysis and insight into the new, uncertain era of South African politics heralded by the 2024 general election. Including a specific focus on municipal politics, it will provide full analysis in the run-up to next year’s municipal polls.
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