00:00Now, how would you characterize South Africa's economic outlook for 2026?
00:05And what do you see as the main domestic or external pressures?
00:09Let me start by taking a step back and say over the past few years, we've been working on some few targets.
00:18And we've built in a couple of pillars for the economy.
00:24Chief among those is macroeconomic stability.
00:26On that front, we've achieved a lot of progress.
00:31Our debt to GDP has begun to stabilize.
00:34We now have got a reduced inflation targeting to 3%.
00:38All of those things are contributing positively to growth.
00:43We have embarked on a number of structural reforms which are beginning to bear fruit.
00:47As a result of that, we see our economy beginning to tick up.
00:51Oh, OK. Assuming everything remains the same, we're looking at about 1.8.
00:58I had with Zou.
01:00So should households and companies expect any tax increases in the coming budget?
01:07It's something I can't say.
01:08It's something I can't say.
01:13My team at National Treasurer is always advising me not to raise expectations or do anything before budget.
01:22But by and large, overall, it's not something we intend making major substantial taxes.
01:32That I can say.
01:33Minister, what is the single biggest risk that could cause this budget's assumptions to unravel if growth or revenue disappoint?
01:43On the global front, the geopolitical situation poses a risk for us.
01:51We don't know how it's going to unfold and what are the implications.
01:54As you can see, as you know, South Africa is one of the open economy and embedded in the global economy on the African continent.
02:05Anything that happens, particularly in the Western economies, has got serious implications for South Africa.
02:10As you would have seen during the global financial crisis, we had a seat on the African continent.
02:16So on the global front, that to us is a war.
02:20But so it could be like a growth shock or tariffs or even a big dollar move?
02:25All of those things.
02:27I mean, if, for instance, a trade war materializes between the major powers, it would have a serious impact on us.
02:37Minister, how important is the dependence of institutions such as National Treasury or the South African Reserve Bank in sustaining investor confidence,
02:45given some of the attacks that we've heard on the Fed?
02:47Look, I can safely say those two institutions have demonstrated resilience and independence over the years
02:59and supported by the constitutional framework which supports the independence of those institutions.
03:07I think critically they are.
03:10And that, of course, feeds through investor confidence.
03:13Is there a direct line into how investors look at your country?
03:18Yeah, it feeds through into investor confidence because one of the issues the institutional investors are looking for are credible and independent institutions.
03:28To that extent, we can say we're safely sound in that regard.
03:33Can you give us an indication of how negotiations with the U.S. are going on trade and tariff and what you're expecting in the next 12 months?
03:38We are engaged with the U.S. on trade and tariffs.
03:43We've had some time where we're not sure whether we're coming or going.
03:48But over the last three months, we've been able to table proposals on the table.
03:53They've been able to table their counter proposals.
03:56And we're engaged in those negotiations where I cannot, I'm not at liberty to divulge the details of the negotiations.
04:03But are you quite confident that there will be an agreement in the next quarter, in the next two quarters?
04:09I'm quite confident that we will have a deal with the United States of America on the trade front.
04:15Minister, how would you describe this Davos?
04:18Davos is an important institution in two respects.
04:24The first one, there's a lot of the side events.
04:26Some of them provide useful information which we attend.
04:29But the second thing is the ability to meet a number of people and network.
04:34That, to me, is quite critical because some of those people you would have needed to travel to a number of different countries.
04:43You find them in one place, and in that respect, you save costs.
04:46So this is a useful environment.
04:49Away from geopolitics, it was a lot about AI.
04:52How do you see AI changing your economy?
04:54Obviously, AI is quite a critical instrument in changing the economy.
05:01It's going to, the disruption is going to fundamentally change how industries operate.
05:07And in that regard, all countries are going to begin to use the technology.
05:13And, Minister, I mean, we've spoken to a number of ministers, and there's always this tension about, you know, balancing the need to press ahead with fiscal consolidation,
05:21whilst at the same time scaling up public investment to support growth and maybe spend a little bit more for the AI transformation.
05:29How do you see that balancing act?
05:31Minister, fiscal consolidation is a necessary but insufficient condition for growth.
05:37But it is necessary, without fiscal consolidation, it's difficult to achieve all other associated growth-enhancing policies.
05:48In that sense, there's that tension.
05:49We have got to maintain fiscal consolidation, but at the same time, parallel to that, you drive some growth-enhancing reforms.
05:59Is it trickier than before because of the need to rethink growth?
06:04It's trickier in the sense that a number of kind of puzzles in the game, there's a, we've just talked about AI, we've just, there's a geopolitical risk,
06:18there's a whole range of other things which influence how you respond, how you navigate the landscape.
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