Warwick Wealth Matters: The SA budget in times of global volatility

By Managing Director, Marc Wiese, March 2025

As we progress through the first quarter of 2025, we once again find ourselves navigating a period of heightened market volatility, both locally and internationally. The recent return of Donald Trump to the U.S. presidency has already had a notable impact on global markets, with the S&P 500 down 4.8% year-to-date. In contrast, at the time of writing, the Johannesburg Stock Exchange (JSE) All Share Index has shown resilience, posting a 3.5% gain.

The phrase “volatility is the new normal” has never been more relevant. Over the past few years, we have witnessed significant and unpredictable fluctuations in financial markets and economic conditions. Investors must acknowledge this reality and prepare accordingly. Now, more than ever, having an experienced and qualified wealth management partner is critical to navigating these turbulent times with confidence.

Despite the short-term uncertainty, history has shown that markets tend to trend upwards over the long run. As highlighted in last month’s article, diversification remains a fundamental investment principle, enabling investors to achieve a smoother experience across different market conditions. By spreading risk across various asset classes and geographies, investors can better withstand economic shifts and market corrections.

Closer to home, February 2025 saw an unprecedented delay in South Africa’s National Budget Speech, which was eventually delivered by Finance Minister Enoch Godongwana on 12 March 2025, after much anticipation and political debate. The budget, however, remains a contentious issue within the Government of National Unity (GNU), with ongoing discussions among key stakeholders.

Government spending for the 2025-26 financial year is projected to reach R2.59 trillion, while tax revenue is expected to total R2.22 trillion, leaving an anticipated budget deficit of R370 billion. Economic growth remains sluggish, registering just 0.6% in 2024, with GDP expected to average 1.8% over the medium term. Alarmingly, debt-service costs are set to hit R389.6 billion for the year, consuming 22 cents of every rand in revenue—more than the combined government expenditure on health, policing, and education.

Given these realities, it is crucial for the government to prioritise sustainable economic growth over short-term interventions. Cutting unnecessary spending and maintaining a prudent approach to taxation are essential to ensuring long-term fiscal stability. Ultimately, economic growth remains the most effective means of job creation and national prosperity.

As always, should you have any questions or require guidance, please do not hesitate to contact your Warwick Wealth Advisor or specialist.