Sanisha Packirisamy, Chief Investment Economist at Momentum Investments

Global growth has proven sturdier than feared despite a harsher trade regime, but remains pedestrian by historical standards as protectionism, fiscal strain and political fragmentation sap momentum. Escalating tariffs have hardened into a structural feature of global policy, unsettling markets and redrawing supply chains without tipping the world into recession.

Domestic demand has acted as a quiet stabiliser, supported by resilient labour markets and adaptive firms. Inflation paths are diverging sharply. China is easing into disinflation amid industrial overcapacity, Japan is tightening cautiously to defend its fragile exit from deflation, while Europe remains wary of cutting rates too aggressively. The United States (US) stands apart. Fiscal excess, tariff-driven price pressures and doubts around institutional independence threaten a rise in bond yields.

Against this unsettled backdrop, bond markets are reasserting discipline, forcing governments to pay for fiscal indulgence as public debt ratios climb. South Africa is caught on the margins of a fragmented global order. A favourable commodity price mix and a firmer rand offer temporary insulation, while improved fiscal discipline has been rewarded with an early sovereign rating upgrade. Yet growth remains modest, constrained by weak investment and coalition politics. Encouragingly, softer inflation and a credible shift to a lower inflation target should give the SA Reserve Bank scope for further measured easing in 2026, provided political and reform momentum holds.

Read Momentum’s full investment note here.

ENDS