A slight yet positive increase in South Africa’s economic growth is anticipated over the next few years, but US President Donald Trump might throw a spanner in the works.
According to a press release, Doctor Clement Moyo, economist at Ntiyiso Consulting, predicts that the US won’t renew the African Growth and Opportunity Act (AGOA) after it lapses in September, which will have a detrimental impact on vehicle exports.
“South Africa exports vehicles worth R1.9 billion (22%) to the US, creating 86 000 direct jobs and 125 000 indirect jobs in other industries thanks to AGOA,” Moyo said.
He presented an economic forecast on the country and specifically the automotive and retail motor industries to MIBCO, the Motor Industry Bargaining Council, at the pre-bargaining conference held in Kempton Park on March 12.
“The global economy has been suffering since the Covid-19 pandemic, with limited economic growth and a sharp rise in inflation.
In 2024, the world’s economic growth was 2.7%. It is predicted that Trump’s sweeping 25% tariffs on all metal imports to the US will have a massive impact.”
Moyo added, “South Africa’s economic growth was a mere 0.6% in 2024. The forecasted economic growth for 2025 and 2026 is 1.8% and 2% in 2027, and 2.1% in 2028. This means that South Africa’s Gross Domestic Product (GDP) is too low to achieve any of the country’s socio-economic growth strategies to help alleviate unemployment.”
According to him, Trump’s tariffs are expected to result in a rise in inflation from its current 3.2% to 4.5% in the fourth quarter of this year. “Inflation is a killer to economic growth.”
The automotive sector contributed 5.3% to GDP in 2023, of which the retail motor industry contributed 2.1%. Vehicles are considered luxury goods, hence sales are heavily influenced by inflation and high interest rates.
Moyo explained that the 900 000 vehicles sold in 2024 generated R362 million in revenue, with an additional R123 million in components sold. The industry employs 304 723 people, 8% of whom are foreigners with scarce skills.
The release added that this economic forecast presentation will be shared with all parties in MIBCO before the first round of the wage and substantive negotiations starts on April 10.
MISA is set to submit the demands of its members on April 1.
