Godongwana sounds alarm on trade war risks as South Africa courts investors in Davos

Godongwana sounds alarm on trade war risks as South Africa courts investors in Davos

South Africa may be rolling out the welcome mat for investors in Davos, but Finance Minister Enoch Godongwana has cautioned that global politics could quickly complicate that message.

Speaking on the sidelines of the World Economic Forum (WEF) Annual Meeting, Godongwana warned that an escalating global trade war could undermine South Africa’s economic recovery and investment ambitions even as the country works hard to present itself as open for business.

Selling South Africa, with eyes wide open

Addressing business leaders at the South Africa Night Reception, Godongwana said government’s pitch to the world remains consistent: South Africa wants investment, partnerships and long-term capital.

This message is being reinforced by Team South Africa in meetings across Davos, with some international partners already engaging directly with the delegation. For a country desperate to boost growth, jobs and infrastructure spending, the stakes could not be higher.

But Godongwana was frank about the risks lurking in the background.

“If a trade war does emerge from the current geopolitical tensions, it’s going to be a challenge for us,” he said, describing it as a headwind South Africa cannot afford to ignore.

Why global tensions hit home

South Africa’s economy is deeply tied into global trade, finance and supply chains. That interconnectedness brings opportunity but also vulnerability.

Any disruption to global commerce, capital flows or investor confidence is likely to spill over locally, threatening growth, employment and fiscal stability. Godongwana described this exposure as a national risk that could undo years of reform and hard-won economic consolidation.

These concerns are particularly relevant in Davos this week, as global leaders debate protectionism, shifting alliances and the future of trade.

The US factor in Davos conversations

Adding another layer of uncertainty is the United States, one of South Africa’s most important trade and investment partners. US President Donald Trump, marking a year since returning to the White House, is set to address the forum, while diplomatic and trade relations between Pretoria and Washington have cooled.

Despite the tension, Development Bank of Southern Africa (DBSA) chairperson David Makhura said cooperation and capital mobilisation have continued.

From a development finance perspective, he noted, uncertainty and risk are part of the terrain and investment is ultimately about managing those risks.

Reform, partnerships and fiscal pressure

Godongwana emphasised that South Africa’s reform agenda has relied on cooperation, particularly between government and the private sector. Structural reforms, including those involving state-owned entities, have progressed through collaboration rather than confrontation.

That partnership, he suggested, will be even more crucial if the global economy turns harsher due to trade disputes.

The prospect of a trade war is also sharpening debates at home about fiscal policy. Government is under pressure to contain spending while maintaining credibility and certainty a balancing act that carries both economic and political consequences.

While stopping short of announcing specific measures, Godongwana said government is actively considering how to respond, stressing the importance of fiscal prudence.

For investors watching from Davos, the message was clear: South Africa remains open for business, but it is also bracing itself for an increasingly unpredictable world.

{Source: IOL}

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