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The Citizen
21-07-2025
- Business
- The Citizen
Can SMEs survive Trump tariffs? Here is what small businesses can expect from July
There is still hope that the government trade negotiation teams will be able to strike a deal before the 30% tariffs come into effect. It is about to be a bumpy road for small and medium enterprises (SMEs) in South Africa from July due to the 30% United States (US) import tariffs, hikes in electricity and petrol prices and the uncertainty surrounding the interest rate announcement coming on 30 July 2025. Miguel da Silva, group executive for Business Banking at TymeBank, says it is essential for SMEs to prepare for the impact of a 30% US import tariff, which is set to take effect on 1 August 2025. The impact of tariffs on SMEs Da Silva adds that the tariff hike is bad news for businesses that currently export to the US, especially those involved in the agricultural, automotive, and mining sectors. 'The tariff increases will also have repercussions for the broader economy, with commentators saying the move could lead to thousands of job losses across the affected sectors.' He says there is still hope that the government trade negotiation teams will be able to strike a deal before the 30% tariffs come into effect. In the meantime, President Cyril Ramaphosa has called on South African companies to accelerate their search for alternative markets in order to promote better resilience in both global supply chains and the South African economy. ALSO READ: SMEs need to brace for reduced orders due to a 30% US tariff New export markets for SMEs Da Silva says exporters have been seeking out new markets, taking advantage of trade agreements such as the African Continental Free Trade Area (AfCFTA) to strengthen intra-African commerce and lessen reliance on the US. 'The Brics+ bloc also presents an opportunity for local exporters to tap into major markets like China, Southeast Asia, Saudi Arabia, and the UAE. 'Already, China has announced a decision to eliminate all tariffs on imports from the 53 African countries, including South Africa, which is welcome news for SMEs looking for new markets.' Electricity and petrol price increases He highlighted that electricity and petrol price increases add to SMEs' woes, but on the bright side, inflation appears to be under control. 'The US tariff blow comes at a time when South African SMEs are already facing margin squeeze because of additional cost pressures from energy price hikes and fuel price increases, all of which threaten not only their short-term profitability but also their long-term sustainability and competitiveness.' According to the Bureau of Economic Research's (BER) latest survey, inflation expectations have fallen to their lowest in four years. 'Respondents expect inflation to be below 4% this year, echoing the view of Reserve Bank governor Lesetja Kganyago.' ALSO READ: Mid-year financial check for SMEs: Tips to prepare for the next six months Unemployment remains a concern He has noted that there is modest growth and mixed expectations around interest rates, while unemployment remains a concern. 'GDP data for Q2 2025typically arrives on 25 July. The recent modest growth of 0.4% quarter-on-quarter suggests continued economic challenges, making this release vital for demand forecasting and timing market expansion. 'Expectations about the outcome of the 31 July South African Reserve Bank's (SARB) Monetary Policy Committee (MPC) meeting, scheduled for 31 July 2025, are mixed.' Interest rates to hold Da Silva highlighted that most analysts believe interest rates will remain unchanged, while a few still see a possibility of a 25-basis-point cut. 'We hope the SARB decides to put growth above inflation control this time. In principle, lower interest rates mean more disposable income for consumers, which should ultimately result in increased spending and demand for goods and services from SMEs.' He emphasised that there is an increased collaboration between the private sector, government, and financial institutions to foster funding and investment opportunities for SMEs. 'This may include government initiatives, revamped credit guarantee schemes, and partnerships with fintech companies.' NOW READ: Here is how SMEs can take advantage of the G20 and B20 summits
IOL News
02-07-2025
- Business
- IOL News
South Africa's economic outlook worsens, but wage growth expectations rise
A new survey shows expectations of a wage increase Salaries are now expected to increase by 4.9% this year and 5.1% in 2026, up from 4.5% and 4.8% respectively in a first quarter survey, according to the BER. South Africans are now more pessimistic about economic growth, with financial analysts, business executives, trade union representatives, and households seeing gross domestic product materially lower than three months ago. However, respondents see higher wages even though they anticipate a slow down in inflation. Salaries are now expected to increase by 4.9% this year and 5.1% in 2026, up from 4.5% and 4.8% respectively in the previous survey, according to the BER. This is according to the Bureau of Economic Research's (BER) second quarter survey, which polled these three groups on behalf of the South African Reserve Bank. Respondents now expect the economy to grow by a mere 0.9% this year, compared to 1.2% previously. For 2026, those polled anticipate gross domestic product (GDP) growth of 1.2%, down from the 1.4% forecast in the first quarter. South Africa's GDP gained 0.1% in the first quarter of the year, which beat economists' expectation of a decline.
Daily Maverick
27-06-2025
- Business
- Daily Maverick
SA's sentiment split — rich rebound, poor left behind
Depending on who you believe, consumer confidence is back, but with one crucial qualification — it's still negative. After plunging in Q1, South Africa's Consumer Confidence Index (CCI) is back up, but only for some. A sharp rebound in middle- and upper-income sentiment signals short-term resilience, but low-income households are still squeezed. The CCI isn't just sentiment – it's about who spends, and who can't. Wait, what is the CCI? The quarterly CCI compiled by First National Bank (FNB) and the Bureau of Economic Research (BER) is meant to measure how South Africans feel about three key questions: The country's economic outlook. Their own household's financial situation. Whether it's a good time to buy big-ticket items such as furniture or appliances. Each quarter, 500 adult South Africans are contacted via phone interviews across representative demographics to ask these questions – and the result reflects the net balance: the percentage of those who feel optimistic minus those who feel pessimistic. Old Mutual Wealth's chief investment strategist, Izak Odendaal, summed up the current sentiment succinctly: 'The economy is growing – but people don't feel good about it.' Rebound from close to rock-bottom In Q1 of 2025, the CCI plummeted from -6 to -20, a downturn driven by a mix of domestic political instability and international pressure. The proposed VAT hike and subsequent withdrawal, Budget-related infighting between ANC and DA partners, a short but sharp return to Stage 6 loadshedding and Donald Trump's revived tariff aggression towards South Africa all contributed to the collapse. By Q2, the CCI had recovered to -10 – a marked improvement, but still well below the historical average of -1. A May rate cut helped lower debt servicing costs, inflation on durable goods was subdued and political tensions calmed. But sentiment remains fragile, and, like the economy itself, uneven. At -10, the index is still far below its 30-year average – and firmly in negative territory. The recovery, as detailed in the FNB/BER release, mirrors the structural realities of South African inequality. Confidence didn't rise evenly across the board, but rather tracked closely with income. 'People are basically saying everything around me is falling apart, but my own finances are okay,' continued Odendaal. 'That's the kind of dissonance we're seeing – and it might explain why they're still spending.' Why this matters In a low-confidence environment, people tend to cut back and spend less, prioritising essentials such as food and debt servicing. In a high-confidence environment, people spend more – especially on discretionary goods – and tend to make greater use of available credit. The CCI is less of an economic mood ring and more a real-time proxy for spending power and economic activity on the ground. One index, three economies Among high-income households – those earning above R20,000 a month – sentiment surged from -30 to -11. While that's a significant gain, it's still not back to late 2024 levels. A lack of inflation-related tax bracket adjustments or new credits in Budget 3.0 may have capped the recovery. Middle-income earners, between R5,000 and R20,000 per month, showed the strongest recovery: confidence climbed to -7, matching late 2024 levels. This group likely benefited the most from the two-pot pension withdrawals, a 25 basis point rate cut, and lower fuel prices, alongside increased affordability of newer vehicle models. Low-income households – those earning under R5,000 – barely moved. Confidence ticked up only two points, from -17 to -15. These households, the majority in South Africa, have little access to pension withdrawals or formal credit, and continue to feel the brunt of rising food inflation, unemployment and climate shocks such as the Eastern Cape floods. 'Given the deterioration in both the global and domestic economic outlook in recent months… it's not surprising that high-income confidence settled at a lower level,' said FNB Chief Economist Mamello Matikinca-Ngwenya, in the Q2 CCI release. Despite the bleak sentiment data, consumer spending appears more resilient. 'Retail and vehicle sales are holding up – even though the CCI is currently lower than it was during the 2009 recession,' Odendaal noted. Retail echoes and spending signals What does a rebound in sentiment mean for the real economy? Retail sales rose 5.1% year-on-year in April. New vehicle sales jumped 30% in May. Middle-class consumers are spending again – cautiously. But this recovery comes with caveats: The two-pot pension bump is a once-off. Inflation is edging upward. The bottom third of households remain under economic strain. Confidence is not income – and that gap could widen if price pressures accelerate. But what does this mean? The latest CCI tells a story of fragile optimism, but only for those with buffers. If you're middle or high income, you may be feeling more secure, and the data suggests you're already spending more. But if you're among the country's lower-income majority, those gains are unlikely to feel real. Inflation, unemployment and rising food costs continue to erode financial confidence, while access to credit and relief remains unequal. For policymakers, the message is clear: sentiment is recovering, but unevenly. Without equitable relief or targeted support, confidence may return only to those who need it least. 'The question is: is the economy growing? Yes, slowly. Are people happy? No. These are two different questions,' Odendaal said – a reminder that in economics, feelings and fundamentals don't always align. DM
Zawya
04-06-2025
- Business
- Zawya
South African business confidence slips in second quarter of 2025 on tariff woes
South African business confidence fell in the second quarter of 2025, pressured by trade uncertainties due to U.S. President Donald Trump's "Liberation Day" tariffs and local logistical constraints, a survey showed on Wednesday. The business confidence index dropped to 40 points from 45 in the first quarter, according to a survey by the Rand Merchant Bank (RMB) and compiled by the Bureau of Economic Research. South Africa's rand hit an all-time low in April, hurt by the trade war and the risk that the country's coalition government could lead to instability. However, it began to recover after the 90-day tariff pause. Last week, the central bank cut its repo rate by 25 basis points to 7.25%, lowering its inflation and economic growth forecasts for this year and next year. The repo rate would provide some relief, the RMB said on Wednesday, but also warned that more was needed to reignite the spark in the country's economy. The coalition government has been working to boost the country's growth rate through reforms, but persistent challenges, such as logistics bottlenecks at ports and on the freight rail network, are improving only gradually. Sectors such as retail, new vehicle dealers, builders contractors and manufacturing all reported a fall, RMB said, noting that the wholesale traders segment, which marked an increase in confidence, was the sole exception. "The majority of the respondents are thus pessimistic about trading conditions. While remaining above the average of 2023 and 2024, confidence is now a touch below the long-term average level," RMB said. (Reporting by DhanushVignesh Babu in Bengaluru; Editing by Janane Venkatraman)
Reuters
04-06-2025
- Business
- Reuters
South African business confidence slips in second quarter of 2025 on tariff woes
June 4 (Reuters) - South African business confidence fell in the second quarter of 2025, pressured by trade uncertainties due to U.S. President Donald Trump's "Liberation Day" tariffs and local logistical constraints, a survey showed on Wednesday. The business confidence index dropped to 40 points from 45 in the first quarter, according to a survey by the Rand Merchant Bank (RMB) and compiled by the Bureau of Economic Research. South Africa's rand hit an all-time low in April, hurt by the trade war and the risk that the country's coalition government could lead to instability. However, it began to recover after the 90-day tariff pause. Last week, the central bank cut its repo rate by 25 basis points to 7.25%, lowering its inflation and economic growth forecasts for this year and next year. The repo rate would provide some relief, the RMB said on Wednesday, but also warned that more was needed to reignite the spark in the country's economy. The coalition government has been working to boost the country's growth rate through reforms, but persistent challenges, such as logistics bottlenecks at ports and on the freight rail network, are improving only gradually. Sectors such as retail, new vehicle dealers, builders contractors and manufacturing all reported a fall, RMB said, noting that the wholesale traders segment, which marked an increase in confidence, was the sole exception. "The majority of the respondents are thus pessimistic about trading conditions. While remaining above the average of 2023 and 2024, confidence is now a touch below the long-term average level," RMB said.
