Trump may spell doom for SA economy

The president-elect of the United States of America is Donald Trump. Controversial and polarizing, the billionaire is an enigma like no other. Market reactions has been volatile in reaction to the news of a Trump administration for the next four years and questions abound.

What implications does a Trump presidency hold for South Africa? According to Professor André Heymans from the School of Economic and Business Sciences at the North-West University, the consequences may be dire.

“When the news broke, the rand lost approximately 3.7% of its worth, but since then it has stabilised a bit. Although Trump has mentioned speech that the USA want to do business with other countries, his focus will be on his country’s fledging middle class by bringing jobs back to the USA and keeping them there. That means that the USA will want to be more self-sustaining, resulting in less manufactured goods being imported to the USA from other countries – including South Africa.  The main concern is that Trump will want to accomplish this by raising import costs as to make it cheaper for Americans to buy locally produced goods in comparisons to imported ones. The USA is one of South Africa’s single biggest export destinations and to implement such a hike in import costs will severely hurt South Africa’s economy,” says Heymans.

There is, however, a flipside to the coin should government decide to exploit it.  According to Professor Melville Saayman, director of the research unit TREES (Tourism Research in Economic Environs and Society), the former reality television star’s abrasive attitude may hold a benefit for this country’s tourism sector.

“When one looks at what Trump has proposed during his campaign, then it seems that traveling to the United States will become a lot more difficult now that he is president. He is a proponent of stricter measures of control and in the past South Africa has been able to exploit such situations. I think with some creative marketing we will be able to do so again because we are still one of the best value for money destinations. I think that until he does some positive things over an extended period of time the country’s reputation and image will suffer. He will need to foster a sense of trust and confidence and that will be hard to do seeing that a lot of the mainstream media will focus on the more negative aspects of his speeches and his actions,” says Saayman.