SA’s economic crisis deepens as Dawie Roodt urges immediate government action

South Africa could be heading for a severe recession if urgent action is not taken to stabilise the economy and rebuild market confidence, warns chief economist Dawie Roodt.

Speaking to BizNews in a hard-hitting interview, Roodt described a nation in deep political and financial crisis. He cited rising instability within the ANC, a weakened leadership, and lack of reform as key drivers of the looming economic downturn.

Political instability at the centre of crisis

Roodt said the government’s inability to push through structural changes — combined with infighting in the coalition government — has severely shaken investor confidence. Although he praised Finance Minister Enoch Godongwana’s understanding of economic issues, he said the financial markets have lost faith in his ability to deliver.

“The minister knows the numbers, but the markets no longer trust him to act,” Roodt explained.

He highlighted tensions within the ruling coalition, including cases where ANC allies voted against the national budget, as evidence of a fractured administration unable to lead decisively.

Calls for fresh elections

Roodt argued that the country’s political climate is too unstable to support meaningful economic recovery. He floated the idea of early elections, saying a new mandate could help restore public trust and political clarity.

Polls from the Social Research Foundation, Roodt added, show the ANC losing ground. While he does not foresee the party regaining a majority, he believes smaller parties like the DA, EFF and MK Party could benefit. He also suggested that a new centrist force could appeal to voters seeking balance between the ANC and DA’s approaches.

Bond market collapse and rising interest rates

The most alarming part of Roodt’s forecast concerns South Africa’s bond market. He warned that if the state continues spending beyond its means, the country could face a dramatic rise in bond yields — potentially reaching 20% or higher.

“Imagine waking up to bond yields at 25%. The rand would crash, fuel prices would double, and our entire financial system would be at risk,” he said.

This scenario, he added, would force the South African Reserve Bank to hike interest rates sharply, leading to a deep recession and widespread economic hardship.

Urgent reforms needed

Roodt criticised the government’s decision to increase public sector wages by 5.5%, despite inflation being just 3%. He called it evidence of entrenched interests in the civil service blocking reform.

“The people benefiting from the current system are protecting their privileges at the cost of the broader economy,” he warned.

To prevent collapse, Roodt urged immediate action: implement reforms that promote growth and drastically reduce government spending.

“Don’t wait for a market crisis to force your hand,” he cautioned. “Act now — while you still can.”

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Sourced:African Insider