STANLIB Podcasts

In this podcast, STANLIB Chief Economist Kevin Lings unpacks the reasons for the higher tariffs announced by US President Donald Trump, and their possible impacts. Those impacts are likely to include higher inflationary pressure, especially in the US, and a widespread slowdown in economic activity, though it is too soon to be definitive.

Any commentary or forecasts indicated in this document are for information purposes only and not guaranteed to occur. Additional information about products/funds is available on the Minimum Disclosure Document/Factsheets which can be obtained from the website (www.stanlib.com).

In this short podcast, STANLIB’s Chief Economist, Kevin Lings, explores the implications of the passing of the controversial 2025 Budget in the National Assembly by the ANC in alliance with smaller parties, excluding the DA. This is very likely to lead to a 0.5% increase in VAT in 2025 and again in 2026, but it also has longer-term consequences for SA’s political and financial landscape.

In this week’s podcast, STANLIB’s Chief Economist Kevin Lings discusses increasing nervousness in US financial markets about stagflation as a result of President Trump’s tariff moves. Inflation looks likely to remain above the US Federal Reserve’s target for some time, while forward-looking indicators on manufacturing and tourism suggest a slowing of activity.

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Listen to Wehmeyer Ferreira (COO, Systematic Solutions) and Rademeyer Vermaak (Head of Systematic Solutions) as they discuss how the top-performing STANLIB Enhanced Multi Style Equity Fund and the STANLIB Equity Fund are positioned for success in the coming months.

Any commentary or forecasts indicated in this document are for information purposes only and not guaranteed to occur. Additional information about products/funds is available on the Minimum Disclosure Document/Factsheets which can be obtained from the website (www.stanlib.com).

Despite a subdued domestic inflation rate of 3.2% y/y in February, well below market expectations, the South African Reserve Bank (SARB) did not cut the policy interest rate, STANLIB Chief Economist Kevin Lings says. This decision probably reflected the SARB’s desire to bring inflation down sustainably to 3% and nervousness about global developments.

The US Federal Reserve (Fed)’s decision to hold interest rates was accompanied by a revision to its 2025 economic growth forecast down to 1.7% from 2.1% previously and a higher inflation forecast at 2.7% (from 2.5%). However, the Fed believes inflationary pressure from tariff hikes will be transitory. That indicates no need to raise interest rates - and the Fed may even be inclined to cut rates in the second half to prevent an economic slowdown, Kevin says.

In this podcast, STANLIB Chief Economist Kevin Lings says US consumer price inflation (CPI) data for February, released last week, was a positive surprise. It showed even shelter inflation is on a downward trajectory. However, the data does not take recently-announced tariff increases into account. On 2 April the Trump administration is expected to implement the tariff increases it has deferred.

US survey data shows an increase in inflation expectations by households and an expectation by businesses that economic activity will slow down. The risk of a US recession is rising, although it is not yet becoming a certainty. This makes it difficult for the US Federal Reserve to decide on interest rates. The market is anticipating two or three more interest rate cuts this year, but that may prove to be over-optimistic.

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Tarryn Sankar, STANLIB Fixed Income Head of Credit and Investment Research, highlights three welcome measures in the Budget. First, there will be no new support for SOEs; instead, the focus is on direct support for infrastructure projects. Secondly, innovative funding mechanisms for infrastructure are prioritised and, encouragingly, consolidation of functions could materially shift the quality and quantity of delivery. Lastly, the Budget is unlikely to increase the risk of a ratings downgrade.

Any commentary or forecasts indicated in this document are for information purposes only and not guaranteed to occur. Additional information about products/funds is available on the Minimum Disclosure Document/Factsheets which can be obtained from the website (www.stanlib.com).

Sylvester Kobo, STANLIB Deputy Head of Fixed Income, explains the VAT hikes of 0.5 percentage points proposed over each of the next two years will yield government about R43 billion in additional revenue, falling short of government needs. Other revenue measures will not cover the shortfall, but the government plans to use cash reserves rather than raise new debt. Bonds and the rand reacted positively.

Any commentary or forecasts indicated in this document are for information purposes only and not guaranteed to occur. Additional information about products/funds is available on the Minimum Disclosure Document/Factsheets which can be obtained from the website (www.stanlib.com).

STANLIB Chief Economist Kevin Lings says that although the Minister proposes a smaller-than-expected VAT increase, he has sought additional revenue elsewhere by removing an adjustment for fiscal drag and implementing smaller increases in social grants. Hopefully, opposition to the VAT increase from the DA will be resolved by 2 April. Kevin says the biggest disappointment in the Budget is the weak growth outlook over three years, despite its focus on infrastructure and public-private partnerships.

In this podcast, STANLIB Chief Economist Kevin Lings notes that SA’s economy grew by a disappointing 0.6% q/q in Q4 2024, and by merely 0.9% on an annual basis. This continues a long-term trend: over the last 10 years, the country’s GDP growth has averaged 0.8% a year. Turning this weak performance around requires policies that stimulate growth and encourage more private sector involvement.

Moving to SA’s Budget announcement on Wednesday, the focus will be on the originally mooted 2% VAT increase, says Kevin. Current consensus is that VAT is likely to go up by about 0.75%, with cuts in spending in some categories to make up the revenue deficit. However, a better plan on spending is needed in future to avoid constantly increasing taxes.

US employment data still indicates a robust labour market, Kevin says. But forward-looking survey data shows consumers becoming more worried about inflation and job security. Surveys also show that manufacturers are becoming more hesitant until there is clarity on the impact of import tariffs.

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