Dawie Roodt warns of a recession in South Africa

Award-winning economist Dawie Roodt warned that South Africa is heading for a recession, and that people should brace themselves for a very tough time.

Roodt shared his views about the market turmoil related to United States President Donald Trump’s tariffs and local political instability.

On Wednesday, 2 April 2025, Trump announced a global 10% tariff on all imports, and higher rates for a slew of ‘worst offenders’, including South Africa.

He imposed 30% tariffs on South Africa, calling the country one of the worst offenders and saying bad things are happening here.

The US President also announced a global 25% tariff on all imported vehicles, which can affect South Africa’s car manufacturing sector.

Simultaneously, South Africa’s government of national unity (GNU) was threatened after the National Assembly adopted the Fiscal Framework and Revenue Proposals.

The ANC garnered the support of smaller parties, including Action SA, Rise Mzansi, and Build One South Africa (BOSA), to pass this part of the 2025 Budget.

It caused significant friction between the ANC and the Democratic Alliance, which raised concerns that it could break up the GNU.

It is so concerning that South African business leaders have written to the leaders of the country’s two biggest parties, imploring them to settle their differences.

The South African business leaders said that the collapse of the government would lead to job losses and impact growth.

South Africa’s financial markets reacted negatively to the combination of Trump’s tariffs and the local political uncertainty.

The JSE All Share Index plummeted from 89,951 last week to under 79,000 on Monday, 7 April 2025. The financial stocks were particularly hard hit.

The rand weakened from R18.27 against the US Dollar at the beginning of April to R19.34 on Monday, 7 April.

Global markets were also in turmoil as investors sought safe havens to protect their assets and ride out the financial storm.

Dawie Roodt warns of a recession in South Africa

Efficient Group chief economist Dawie Roodt told RSG he was in shock after the dramatic market moves of the last week.

He explained that President Donald Trump’s tariffs turned the global financial market upside down and that it will not recover anytime soon.

He explained that the US dollar was weakening, long-term interest rates in the United States were falling, and money flowed into US capital markets.

People were selling their shares and putting money into the United States capital markets to protect their assets.

A strange phenomenon is that the price of gold has been declining in recent days. Gold is seen as a safe-haven asset, and its price should have increased during this uncertain time.

“This shows that people do not really know what is happening in the financial markets yet,” Roodt said.

He added that many economists and analysts are warning of a global recession due to the Trump tariffs.

Roodt said the likelihood of a recession in South Africa is high, and that people should get a good asset manager to guide them through this period.

“Many people are going to be much poorer after the past week. That is the reality. However, guard against hasty decisions,” he said.

He warned that South Africa and the world’s economies face a challenging future. “The problems will not blow over in a few weeks,” he said.

“The markets will not return to where they were within a month or two. The world is in a different place with high uncertainty.”