The North West University’s (NWU’s) Policy Uncertainty Index (PUI) has recorded a record high level of 81 in the third quarter, compared with 75.9 in the second quarter.

NWU Business School's Professor Raymond Parsons, who helps compile the PUI, says a combination of negative global and internal factors outweighed the positive ones in the PUI over the period.

Some of the negative factors included an uncertain export outlook and continued weakness in total fixed capital formation.

“In the coming year, it is important that a sufficient number of firms feel that economic and political prospects justify their making fresh plans for expansion,” Parsons explains.

Another serious vulnerability is that of weak business sentiment owing to uncertainty about whether the African Growth and Opportunity Act (Agoa), which is due to expire at the end of September, will be renewed by the US, high electricity tariffs and continued crime and corruption challenges. 

Agoa has been a centrepiece of US trade relations with Africa since 2000. The imminent expiry of this important economic legislation for Africa has created uncertainty and the US Chamber of Commerce has urged congressional leaders to swiftly reauthorise Agoa.

Parsons says that, although South Africa has made some progress with growth-friendly structural reforms, the implementation process requires more urgency to reduce policy uncertainty.

He adds that growth-oriented reforms will ensure that leadership, structures, capacity and culture are in place, guaranteeing the right trajectory of results for the foreseeable future.

The most positive news in the period under review was better-than-expected GDP figures for the second quarter of 0.8% quarter-on-quarter growth after only 0.1% growth in the first quarter of the year.

Parsons says incipient economic recovery had not only accelerated but also broadened across several sectors of the economy. Importantly, both household and government consumption spending provided firm support for growth.

The economic upturn is expected to continue in the months ahead, with GDP growth of between 1% and 1.2% now being expected for the country this year.

On the global front, the International Monetary Fund (IMF) will update its economic forecasts for the world in October. The organisation previously revised its expectation of global GDP growth upward from 2.8% to 3% for this year, and from 3% to 3.1% in 2026.

The IMF foresees a modest decline in trade tensions; however, trade policy worldwide remains highly uncertain.

In turn, the Organisation for Economic Cooperation and Development maintains that global GDP will grow by 2.9% this year and next year, with a slowdown in growth expected to be more obvious in the US, Canada, Mexico and China.

The growth outlook for the Chinese economy, although slowing, remains positive for 2025, with consensus projections of about 4.8% GDP growth.

“There is tangible evidence of robust Chinese exports to regions such as South East Asia, Africa and Europe, as well as the implementation of official stimulus measures.

“However, Chinese high-frequency data for August fell short of consensus forecasts on both demand and supply sides. Downside risks to China’s economy are weak domestic consumption, ongoing deflationary pressures and a struggling real estate sector,” Parsons states.