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The new superpower test: Who is trusted when fear rises?

The world keeps asking whether China will replace the United States (US) as the next superpower. That is the wrong question. A better one is more brutal: When the world is afraid, whose money does it still trust?

When it comes to factories, exports, electric vehicles, batteries, and rare earth elements, China has already changed the global economy. It is too large to ignore and too embedded to isolate. Yet, in finance, it remains strangely small. Data from the International Monetary Fund (IMF) for the fourth quarter of 2025 still puts the US dollar at about 57% of global foreign-exchange reserves. The renminbi, in turn, remains below 3%. Swift’s RMB Tracker shows the same imbalance in global payments. China may be the workshop of the world, but the world still does not treat its currency as a shelter.

This distinction matters. A reserve currency is not just a trade convenience. It is a vote of confidence in a country’s institutions, courts, markets, convertibility, and political restraint. This is why the dollar survived so many US mistakes. Washington can run large deficits, fight trade wars, weaponise sanctions, and still borrow in the currency the world wants to hold. That is not normal privilege; it is a financial empire.

China’s problem is that it wants the power of an open financial system without fully accepting the vulnerability that comes with it. Capital controls protect Beijing from destabilising outflows, but they also tell global investors something important: Your money is welcome, but not entirely free. That may work for a development model built on industrial direction and domestic savings. It does not work as the foundation for global monetary leadership.

The latest Chinese data make the issue sharper. April industrial production rose only 4.1% year-on-year, while retail sales barely grew at 0.2%. Fixed-asset investments fell 1.6% in the first four months of 2026. Strip away the diplomatic language and the picture is clear: China has a supply machine that still works, but a demand engine that is spluttering. Households remain cautious. Property remains a drag. State-directed investment is carrying too much of the load.

This is not just China’s problem. South Africa (SA) lives in the space between Chinese demand and dollar power. When China slows, commodity exporters feel it. When the dollar strengthens, emerging markets feel it. When oil rises, inflation returns through the side door. And when global rates stay higher for longer, South African households, businesses, and government finances all lose breathing room.

The Middle East conflict shows how quickly geopolitics becomes a household budget issue. Mortgage rates in the US, United Kingdom, and Germany have risen even though central banks have not necessarily raised policy rates. Markets are doing the tightening themselves, pricing in higher oil, higher inflation risk, and more expensive government borrowing. In other words, the bond market does not wait for press conferences.

A newer risk is now joining the old ones. The IMF has warned that artificial intelligence-driven cyberattacks could become a macro-financial shock. That sounds abstract until one remembers what modern finance is: Confidence moving through software. Payments, settlements, bank funding, trading systems, and client records are all connected. Break enough of that plumbing, and a cyber event becomes a liquidity event.

The investment lesson is uncomfortable. The world is not simply dividing into East and West. It is dividing into systems trusted under stress and systems tolerated during calm. China’s rise is real. The US’ weaknesses are real. But, financial power belongs to the country whose currency, institutions, and markets are still trusted when fear rises.

For SA, the answer is not ideological alignment. It is resilience. Diversified portfolios. Lower fiscal risk. Energy security. Better cyber discipline. Less household fragility. More institutional credibility. The next crisis may arrive through oil, cyber, housing, China, or the dollar. Whatever the trigger, the question will be the same: When confidence disappears, who is still trusted?

This article has been published on Moneyweb.

the New Economic Superpower: The Ability to Switch Others Off

The next trade war may not begin with a tariff announcement. It may begin with something far smaller and more frightening: A payment that does not go through, a hotel booking that disappears, a cloud service that stops working, a parcel that is returned, or a bank transfer that quietly bounces. That is the new shape of economic power. The world is not simply deglobalising. It is discovering that globalisation was built on switches, and that many of those switches are controlled by someone else.

Europe is learning this lesson the hard way. For decades, its relationship with the United States (US) looked reasonably balanced. Europe sold goods. The US sold services, software, platforms, payment systems, and cloud infrastructure. But, these services are no longer peripheral. They are the operating system of modern life. A country can still have factories, skilled workers, and wealthy consumers, yet remain vulnerable if its payments, data, software, and digital identity systems depend on foreign platforms. This is why Europe is suddenly talking about digital sovereignty, alternative payment systems, and its own “Airbus of payments”. It is not really a debate about technology. It is a debate about control. No serious economic bloc wants to discover, during a political dispute, that it cannot pay, compute, insure, book, communicate, or trade without permission from another country’s companies.

China represents the other side of the same problem. It has long been a leader when it comes to cheap manufactured goods and is now also becoming a leader in advanced manufacturing. China is no longer merely exporting toys, textiles, and basic electronics. It is pushing into electric vehicles, clean energy, machinery, chemicals, robotics, industrial equipment, and critical minerals. This is much more threatening because it means that China is now challenging the sectors that built the prosperity of Germany, Japan, South Korea, and parts of Europe. A stronger renminbi may help ease some political pressure, but it will not remove the deeper issue. China has built scale, capability, and state-backed industrial momentum that competitors can no longer ignore.

That being said, the US still looks like the strongest player. Its labour market has improved, corporate profits remain high, and business investment is resilient. But, even the US is not immune to global shocks. If energy prices remain elevated because of the conflict in the Middle East, inflation could remain sticky. If inflation remains sticky, the Federal Reserve cannot simply cut interest rates because politicians want cheaper money. Suddenly, central bank independence becomes more than an academic principle. It becomes a market risk.

Investors are, therefore, facing a strange world: The US controls much of the digital architecture. China controls more of the industrial architecture. Europe controls important niche sectors, but lacks platform scale. Everyone depends on everyone else, while everyone is also trying to depend on one another a little less.

South Africa (SA) should pay attention. We are not only price-takers in commodities and interest rates. We are dependency-takers. We rely on Chinese-manufactured goods, Western financial infrastructure, imported technology, global shipping routes, foreign capital, and external demand for our minerals. In a more coercive world, weak countries do not become neutral. They become exposed.

This does not mean that SA should chase a fantasy of self-sufficiency. We cannot build everything ourselves. But, we can become far more serious about resilience. Energy security, port efficiency, payment stability, cyber protection, digital infrastructure, critical minerals processing, and policy credibility are no longer boring reforms. They are the new foundations of competitiveness. The same applies to portfolios. The best companies of the next decade may not simply be those with the highest margins today. They may be those with pricing power, diversified suppliers, strategic assets, reliable infrastructure, and a low exposure to political chokepoints.

In the old world, efficiency was king. In the new world, resilience may be the real premium.

Ekonomiese Onsekerheid In SA: Hoe Om Jou Finansiële Toekoms Te Beskerm

Suid-Afrikaners is nou al baie goed daarmee om aan te pas. As rentekoerse styg, pas ons aan. Wanneer kos- en brandstofpryse verhoog, pas ons aan. Verswak die rand, dan pas ons aan. As groei teleurstellend is, die werkloosheidsyfer hoog bly en die politiek onstuimig raak, dan pas ons weer aan. Maar daar is ’n gevaar daaraan as ’n mens té goed raak met aanpassing. Op die een of ander stadium hou huishoudings dan op om te beplan en begin bloot net oorleef. Hulle vertraag besluite, gebruik spaargeld, kanselleer versekering, gaan duur skuld aan, of laat hul finansiële toekoms aan die toeval oor. Hulle maak staat op wat ook al oor is aan die einde van die maand. Dít is nie finansiële beplanning nie; dit is eerder finansiële drywing.

Suid-Afrika (SA) se ekonomie is nie in ’n hopelose situasie nie, maar dit is ook nie sterk genoeg om huishoudings te dra wat finansieel onvoorbereid is nie. Onlangse groei was matig en inflasie is relatief onder beheer, alhoewel dit steeds kwesbaar bly vir brandstof- en ander prysskokke. Werkloosheid bly ook steeds een van ons land se diepste strukturele wonde. Met ander woorde, die makroprentjie is nie een van ineenstorting nie, maar daar is ook nie genoeg speling vir gewone families om foute te maak nie. Dit is waarom die ware finansiële vraag besig is om te verander. Dit gaan nie meer oor wátter belegging die beste opbrengs sal lewer nie. Die vraag is nou: “Is my finansiële lewe sterk genoeg om onsekerheid te weerstaan en steeds vorentoe te beweeg?”

Dit is hier waar finansiële welstand meer as net ’n slagspreuk word. Dit dien as ’n raamwerk om veerkragtigheid te bou in ’n land waar onsekerheid deel van die operasionele omgewing is. Finansiële welstand vir elke een beteken om individue en huishoudings te help om ’n lewe te bou wat gekenmerk word deur beter beplanning, beter beskerming en beter posisionering vir langtermyngroei.

  1. Die eerste vlak is finansiële grondslae: Voordat ’n huishouding aan sy welvaart kan bou, moet dit eers beheer ontwikkel. Dit beteken om kontantvloei te verstaan, slegte skuld te verminder, ’n noodbuffer te skep, akkurate finansiële rekords te hou, begunstigdes te hersien en te verseker dat maandelikse besluite met langtermynprioriteite belyn is. In ’n swak ekonomie is die huishoudings wat die meeste sukkel dikwels nie net dié wat ’n te klein inkomste verdien nie, maar ook daardie met te min struktuur rondom die inkomste wat hulle wel het.
  2. Die tweede vlak is inkomstebeskerming: Meeste mense se grootste bate is nie hul aftreefonds, huis of beleggingsportefeulje nie. Dit is hul vermoë om ’n inkomste te verdien oor die volgende 10, 20 of 30 jaar. Tog beskerm baie mense hul selfone, voertuie en huishoudelike toestelle beter as wat hulle die inkomste wat vir dit alles betaal, beskerm. Ongeskiktheidsdekking, ernstigesiektedekking, lewensdekking, vaardigheidsontwikkeling en loopbaanveerkragtigheid is nie kantlynkwessies nie. Dit is sentraal tot finansiële oorlewing.
  3. Die derde vlak is welvaartskepping: Mense neem dikwels emosionele besluite wanneer dinge onseker is. Sommiges raak oorversigtig en sit permanent in kontant. Ander raak desperaat en jaag vinnige opbrengste na. Nie een van dié twee benaderings bou volhoubare welvaart nie. Langtermynbelegging en diversifikasie is steeds belangrik. So ook aftredebeplanning en belastingdoeltreffendheid. Die punt is nie om onsekerheid te ignoreer nie, maar om dit deur te sien met gedissiplineerde beleggings.
  4. Die vierde vlak is welvaartbeskerming: Dit sluit korttermynversekering, boedelbeplanning, testamente, likwiditeitsbeplanning en eienaarskapstrukture in. Dit verseker ook dat jou gesin versorg sal wees sou iets skeefloop. Welvaart word nie werklik geskep as dit kan verdwyn weens een onversekerde gebeurtenis, een wetlike skuiwergat of een swakbeplande boedel nie.

Ekonomiese onsekerheid is ’n realiteit. Suid-Afrikaners kan nie wêreldoliepryse, die rand, rentekoerse, politieke besluite of ekonomiese groei beheer nie. Maar ons kan die gehalte van ons finansiële beplanning beheer. Die huishoudings wat onsekerheid die beste gaan hanteer is nie noodwendig die rykstes nie. Dit is die huishoudings met die sterkste grondslae, wie se inkomste die beste beskerm is, en wat die mees gedissiplineerde strategie vir welvaartskepping en die duidelikste plan het om dít wat hulle gebou het, te beskerm. In SA is finansiële welstand nie ’n luukse nie. Dit is hoe ons onsekerheid verander vanaf ’n permanente bedreiging tot iets wat ons gereed is om te trotseer.

A faster, cheaper, more fragile world

The global economy is starting to resemble a machine that is getting faster even though its bolts are becoming loose. Payments are becoming cheaper, and artificial intelligence (AI) promises productivity gains. Yet, beneath this progress sits a harder reality: Debt is swelling, monetary control is weakening, trade tensions are hardening, and the next financial shock could move faster than regulators can respond. This should matter to South Africans because we live in an open, financially-exposed economy. When the global system shifts, we feel it in our fuel prices, bond yields, food inflation, and investor confidence.

Let us start with stablecoins. Their appeal is clear: They allow money to move quickly and cheaply, often outside traditional banking. For households in countries with weak currencies, they can look like a lifeboat. Why hold money that keeps losing value when a dollar-linked digital asset is just a click away? But, convenience can become a warning. The more citizens save, trade, and think in dollar stablecoins, the more domestic monetary authorities start to thin out. Central banks lose traction. Capital controls become easier to evade. Tax collection becomes harder. And financial crime finds new channels. The real question is not whether stablecoins are useful. It is what happens when private digital dollars begin doing work once reserved for sovereign money. At this point, innovation is no longer just improving finance; it is relocating power.

Then there is AI. Much of the debate focuses on jobs, and rightly so. But, the deeper macroeconomic issue is whether AI becomes a disinflationary force. If firms can produce more with fewer delays, lower administration costs, and better systems, prices may come under pressure. Central banks could find themselves fighting yesterday’s inflation battle in tomorrow’s productivity boom.

Still, that is only half the story. A technology that cuts costs can also deepen inequality, weaken labour’s bargaining power, and accelerate financial reactions. If banks and asset managers rely on similar AI models, the next shock may not unfold over weeks. It may unfold in hours. A more efficient economy is not automatically a more stable one. South Africa (SA), with its unemployment and social strain, should be careful not to confuse productivity with shared prosperity.

Now, place that next to the United States (US). The world treats US Treasury debt as the bedrock of global finance. Yet, America’s debt keeps climbing, deficits remain entrenched, and conflict is adding new spending pressures. The danger is not simply that Washington owes too much. It is that the global system depends so heavily on a borrower whose fiscal discipline appears increasingly political rather than structural. When US yields rise, emerging markets rarely get a vote. They just get the consequences.

China offers a different version of the same fragility. Its large trade surplus is often read as proof of industrial strength. In truth, it also reflects weak domestic demand. China is producing more than it is comfortably absorbing at home, so the excess spills outward. The result is more tariffs, more suspicion, and more fragmentation in world trade. For SA, that is not an abstract geopolitical contest. It shapes export demand, prices, and growth.

Put these trends together and a striking possibility emerges: The world may be entering an era in which efficiency rises while resilience falls. Money moves faster, but states control less of it. Technology lowers costs, but can also compress jobs and amplify shocks. Great powers produce more, borrow more, and trust one another less.

This is no reason for panic. But, it is a reason for seriousness. SA cannot control these forces. It can decide how exposed it wants to be to them. Stronger institutions, credible public finances, better infrastructure, faster reform, and a financial system that can innovate without losing oversight are no longer nice-to-haves. They are the price of resilience in a world that may become cheaper, smarter, and more dangerous at the same time.

This article has been published on Moneyweb.

 

When efficiency turns into blackmail

The global economy has spent three decades mistaking concentration for strength. Put production where it is cheapest. Let the best firm dominate. Centralise supply chains, data, capital, logistics, and technology in the deepest and most efficient nodes. In the language of modern finance, this all looked rational. In the language of risk, it now looks naïve. The world is discovering that when too much value sits in too few places, efficiency stops being a virtue and starts becoming a vulnerability. And that may be the most important economic lesson of the moment.

Take Taiwan: It sits at the centre of the world’s cutting-edge semiconductor production. This is not just a technology story; it is a fragility story. The modern digital economy, from smartphones to cloud computing, artificial intelligence (AI), and advanced weapons systems, rests on an extraordinary degree of concentration. If this node is disrupted, the shock does not stay in Asia. It moves through equity valuations, investment plans, national security calculations, and the assumptions underlying the AI boom itself.

China reveals a different version of the same pathology. Its best companies are not weak. Many are globally formidable, technologically aggressive, and commercially ambitious. Yet, they are being corroded by a domestic system that often keeps weaker rivals alive through subsidies, political protection, and easy credit. In other words, China is trying to build national champions while also preserving the dead weight around them. That is not merely inefficient; it slowly taxes excellence.

Finance is no different. For years, investors convinced themselves that larger private markets meant stronger private markets. But, size and resilience are not the same. When redemption pressure rises, the old truth returns: Liquidity always looks abundant until too many people want it at once. The same structures that seem sophisticated in an upswing can become awkward, gated, and brittle when confidence turns.

Even the dollar, long treated as America’s ultimate instrument of economic power, is starting to show the same tension. The more often dominance is weaponised, the stronger the incentive for others to route around it. Some of those alternatives are inefficient. Some are risky. Some are plainly dubious. But, they emerge, nonetheless. That is how power works in economics: Used too aggressively, it invites avoidance.

South Africans should not treat any of this as distant geopolitical theatre. We live in a country already familiar with the risk of concentration. We see it in our electricity, freight rail, ports, municipal failures, and policy bottlenecks. But, the deeper point is broader. The whole world has been running on concentrated dependence, and the invoice is now being delivered. When too much trust, production, or market access is controlled by too few systems, shocks become sharper and policy becomes more defensive. And that changes what investors should value.

For years, markets rewarded scale, speed, and efficiency above almost everything else. The next decade may reward something else: Resilience. Spare capacity, supplier diversity, domestic capability, trusted institutions, funding flexibility, and operational redundancy all used to look expensive. Now, they look strategic. They may still reduce short-term margins. But, they also reduce the odds of catastrophic interruption. In a more fractured world, that trade-off begins to matter more.

The deeper irony here is that the systems we most admired were often the systems that removed slack. But, slack is not always waste. Sometimes it is what keeps a business, a country, or a financial architecture standing when pressure arrives.

That is why this is bigger than another geopolitical scare or market wobble. We may be living through the early stages of a global repricing, not only of oil, rates or technology, but of concentration itself. For a generation, the world assumed that the most efficient system was the strongest one. It is beginning to learn that the most efficient system may simply be the one that breaks the fastest.

 

The next economic battle is not about oil; it is about who writes the rules

Markets are drawn to visible power. Missiles, tariffs, sanctions, trade wars, oil spikes; these are all things that move prices quickly and dominate headlines. They feel like the real story because they are dramatic and immediate. But the deeper shifts in the global economy often happen elsewhere, in quieter places: Committees, secretariats, treaties, standards bodies, and the institutions that slowly shape how countries and companies are expected to operate. That is why China’s push to host the secretariat linked to the new United Nations High Seas Treaty matters more than it first appears.

At first glance, it can sound technical, almost bureaucratic. Oceans governance does not have the emotional punch of a war or the market impact of an oil shock. But that is exactly why it deserves attention. This is not simply about where officials meet. It is about who gains proximity to an emerging global institution, who helps shape its administrative culture, who becomes central to its networks, and who strengthens its standing as a responsible organiser of international co-operation. All of this matters economically.

Modern economic power is no longer exercised only through factories, military reach, commodity flows, or export strength. Increasingly, it is exercised through influence over the frameworks that govern trade, regulations, resources, data, and the global commons. Whoever helps shape the rulebook does not need to dominate every market directly. It is often enough to help define the language, procedures, standards, and legitimacy within which others must function.

For years, many assumed that although the global economy was changing, the institutional architecture underneath it would remain broadly Western in its character. The United States (US), in particular, was expected to remain the default anchor of the multilateral order. But when the US steps back (whether as a result of fatigue, domestic political division, or strategic neglect), the vacuum does not stay empty. Other powers move in.

China understands that power is not only about building roads, ports, rail lines, and supply chains. It is also about building influence inside the institutions that govern international life. That is a subtler form of power, but in many ways a stickier one. Countries can reject rhetoric. It is much harder to ignore a system once it becomes embedded in how decisions are made.

For investors and businesses, this should not be dismissed as distant diplomacy. Institutions shape commercial reality. They influence compliance burdens, environmental obligations, dispute-resolution mechanisms, reporting standards, and the broader predictability of doing business across borders. Once those frameworks settle, capital begins to adapt around them. So do governments. So do multinational companies.

South Africa should pay attention. We often think geopolitical rivalry only matters when it hits the oil price, the rand, or shipping costs. But countries like ours are also deeply affected by rule-making that we do not control. We export into systems shaped elsewhere. We seek investment from markets that care about standards, governance, and strategic alignment. We operate within legal and commercial frameworks whose direction can change without our consent. That means the contest over institutions is not a side issue. It is part of the terrain on which smaller and mid-sized economies must compete.

There is an irony here. The world talks endlessly about the return of hard power, yet some of the most important battles are being fought through administrative influence, procedural credibility, and institutional positioning. This is slower power, but it lasts. It accumulates quietly, then suddenly looks obvious.

That may be the most thought-provoking feature of the moment. The world is still obsessed with the visible drama of power. Yet the quieter contest may prove more enduring: Not who fires the loudest shot, but who ends up writing the manual everyone else has to use. And that is why the next global economic struggle may not be decided only by who produces more, exports more, or threatens more. It may be decided by who becomes the default organiser of the world.

This article has been published on Moneyweb.

When markets tremble, discipline matters more than forecasts

Every time the Middle East conflict intensifies, the same pattern unfolds: Oil rises, markets wobble, the rand looks vulnerable, and investors begin to feel that doing ‘something’ must be better than doing nothing. This instinct is powerful. It also causes many of the worst financial mistakes. In moments like these, fear creates an illusion of wisdom. A rushed decision can feel prudent simply because the headlines are unsettling. Yet, a frightening environment does not automatically require a dramatic portfolio change. More often, it requires the opposite: A steadier hand.

This does not mean the risk is imaginary. It is real. The Middle East sits close to one of the most important energy chokepoints in the world. Roughly a fifth of global oil and petroleum product consumption, more than a quarter of global seaborne oil trade, and about a fifth of global liquefied natural gas trade move through the Strait of Hormuz. When conflict raises questions about this route, markets react because the consequences can spread well beyond the region itself.

For South Africans, this matters concretely. We do not feel this only as geopolitics. We feel it through fuel prices, transport costs, imported inflation, pressure on household budgets, and tighter financial conditions. Research has repeatedly shown that energy shocks do not remain confined to oil markets. They spill into broader inflation, weaken real spending power, and complicate the task of central banks trying to stabilise prices without harming growth too severely. In other words, a shock that starts in a shipping lane can end up in your monthly budget and, eventually, in investor behaviour.

Still, the biggest financial threat for most people is usually not the event itself. It is the reaction to it. Research on investor behaviour has shown that people are prone to costly mistakes when uncertainty rises. They become more reactive, more short term in their thinking, and more likely to confuse volatility with permanent loss. That is when investors sell good long-term assets after prices have already fallen, stop monthly contributions because the market feels unsafe, or move too much money into cash just when future returns are becoming more attractive. The damage often comes not from the shock, but from abandoning a sound process under emotional pressure.

What do people do who make better decisions in times like these?

Usually, nothing dramatic. They return to first principles. They ask whether their long-term goals have changed, not whether the news cycle has. They ensure their liquidity is sufficient, because an emergency fund prevents forced selling. They stay diversified across asset classes and geographies, because concentration is what turns volatility into real danger. They keep contributing where appropriate, because lower markets also mean cheaper future returns for long-term buyers. And they rebalance calmly if portfolio weights have drifted too far, rather than tearing up the plan.

This is the part that many investors struggle to accept: Good financial planning is not designed for calm periods only. It is built precisely for seasons when markets are noisy, politics is uncertain, and predictions become less reliable. Anyone can feel like a disciplined investor when prices are rising and the world appears orderly. The true test comes when fear is in the headlines and restraint suddenly feels passive. But restraint is not passivity. In finance, it is often the highest form of judgement.

There is also a deeper lesson here: Volatile periods expose the difference between a portfolio and a plan. A portfolio is just a collection of assets. A plan is a framework for making decisions when emotions are running high. Investors who do well over time are usually not those who predict every geopolitical turn correctly. They are the ones who refuse to let every geopolitical turn rewrite their behaviour.

The Middle East conflict may continue to unsettle markets. Oil may remain volatile. Inflation risks may stay uncomfortable. The rand may remain sensitive. All of that is possible. But none of it automatically means your financial plan is wrong. In fact, this is exactly the kind of environment that a well-built plan was meant to survive. When the world becomes more reactive, the wisest financial move is often to become less so.

This article has been published on Moneyweb.

The war that just exposed SA’s real economic problem

For years, the world told itself a soothing story. Oil was the old economy. Artificial intelligence (AI) was the new one. Tankers, pipelines, and shipping lanes belonged to a fading industrial age, while chips, data centres, and algorithms belonged to the future. The Iran war has exposed how false this story was. The future still runs through narrow sea lanes, vulnerable energy systems, and geopolitical fault lines that markets prefer to treat as distant background noise. That is why this is not merely another oil story. Yes, the Strait of Hormuz matters because about one-fifth of the world’s oil and liquefied natural gas moves through it. Yes, oil has surged above $110 a barrel as traders price in disruption. Yes, major banks have lifted their forecasts because they expect the market to stay tighter and more anxious for longer. But the deeper lesson is that a system built for efficiency can become dangerously fragile the moment a single chokepoint is threatened.

The economic chain reaction is wider than many investors still seem willing to admit. Higher oil prices lift transport, insurance, and freight costs. Food flows start to wobble. Shipping patterns distort. Then capital markets feel it. The Gulf states are not just energy producers; they have become an important source of global liquidity. If more of this capital is pulled inward to deal with domestic strain, the rest of the world loses a crucial funding cushion at exactly the wrong moment, when debt issuance is already heavy, and borrowing costs are uncomfortably high.

And then there is the market’s favourite fantasy: The idea that AI somehow floats above the physical economy. It does not. Taiwan and South Korea remain central to the semiconductor chain, yet both depend heavily on imported energy and industrial inputs exposed to disruption in the Gulf. Data centres, meanwhile, are massively power-hungry, and, in the United States, a large share of planned on-site power is tied to natural gas. Strip away the glamour and the conclusion is almost embarrassingly simple: Silicon still needs ships, fuel, and stable trade routes.

For South Africa (SA), the lazy version of this story begins and ends with the fuel price. This story misses the point. The real danger is that a global shock is landing on an economy that is already brittle. We are a net energy importer. The rand has already come under pressure as oil surged, and analysts have warned that the recent return of inflation to the South African Reserve Bank’s (SARB’s) 3% target may prove temporary as the war’s effects feed through. The SARB has already said that it is redrawing its adverse scenarios for this week’s policy meeting because the Middle East shock has changed the inflation outlook.

That changes the rate conversation. A few weeks ago, many households and businesses were still hoping for a gentler path lower. Now the risk has shifted. On current oil, currency, and inflation dynamics, the question is no longer only whether cuts will be delayed; it is whether the SARB may ultimately have to raise rates instead. That would not be because SA suddenly became reckless overnight. It would be because global energy shocks do not ask whether your economy is ready. They simply expose whether it is resilient. This is an implication from the inflation and market repricing now underway, and it is a serious one.

SA’s deepest problem is, therefore, not that the world is volatile. The world has always been volatile. Our problem is that we built too little resilience while hoping for calmer weather. Economies with strong logistics, credible public finances, reliable energy, and policy room can absorb external blows. Economies with weak growth, strained consumers, fiscal pressure, and infrastructure bottlenecks absorb the same blows far worse. The next decade may not belong to the countries with the cleverest slogans about innovation. It may belong to those with the duller, but more important, virtue of resilience. And SA, frankly, still has too little of it.

Can SA fix its Code 3 Economy?

There is a metaphor that says more about our economy than most policy papers do. Think of a Code 3 car. It still runs. It can be repaired, polished, and resold. But everyone knows that something serious happened to it. At some point, it was written off. The damage ran deep enough that, even after repairs, confidence never fully returned. It may still move, but it no longer inspires the trust of a sound, well-maintained car. And that is why some banks will not finance Code 3 cars at all.

This image is uncomfortably close to where South Africa (SA) is now. Not because democracy damaged the car. Democracy gave SA its first legitimate opportunity to rebuild the machine properly. But that is precisely the point: After 1994, SA did not just need repairs. It needed a complete overhaul.

An overhaul is not the same as redistribution. Redistribution can move passengers around inside the car. It can open doors that were locked. It can make access fairer. In a country shaped by Apartheid, that mattered enormously. But it is not the same as rebuilding the engine, replacing failing parts, and establishing the kind of maintenance discipline that allows the car to carry more people, more safely, for decades.

In 1994, SA did not inherit a pristine car. It inherited a deeply unequal one. Official unemployment was 22%, with the expanded rate at 35%. The system was built to serve a minority while excluding millions. Still, some things worked. Institutions had stronger technical capacity. Logistics functioned better. Electricity was more reliable. Ports and freight rail had not yet become the constraints they are today. The inherited machine was unjust in design, but parts of it still provided a platform for future growth. That was the real challenge of a democratic SA: Not merely to share the car, but to rebuild and expand it.

To be fair, democracy did achieve real gains. Government’s own 30-year review records major improvements in access to formal housing, electricity, piped water, and sanitation. Those are meaningful gains in dignity and inclusion, and they should not be casually dismissed. But access is not the same as wealth creation, and this is where the overhaul faltered. SA did not consistently convert expanded access into a stronger, more productive base. Instead of reinvesting while key systems still worked, too much maintenance was deferred. Technical standards weakened. Corruption spread. Cadre deployment undermined capability. In many cases, the workshop itself was looted while the car was still moving.

The consequences are obvious. National Treasury says that easing constraints in electricity, transport, and water is essential for higher investment, faster growth, and job creation. In other words, the engine is underperforming because too many of its critical systems were neglected for too long. That is why the old debate between growth and redistribution is too shallow. SA needed both justice and expansion. It needed more people brought into the car, but it also needed a stronger drivetrain. It needed better schools, stronger skills, infrastructure maintenance, entrepreneurship, capital investment, municipal competence, and institutions strong enough to support growth over time. Instead, too much of the post-1994 path drifted into something weaker: Redistribution without enough productive expansion, inclusion without enough institution building, promises without maintenance. This is how a country ends up with an economy that still runs, but increasingly feels unreliable.

And here lies the real danger: A Code 3 car does not just have a damaged past. It changes how others respond to it in the present. Investors become cautious. Lenders price in more risk. Confidence decreases. Quietly at first, then more persistently. SA is getting close to that threshold. Official unemployment was still 31.4% in the fourth quarter of 2025. That is not the profile of an economy whose repairs have matched its promises.

So perhaps the real question is not whether the car can run. It can. The question is whether we are finally ready to stop patching, stop stripping, stop arguing over the seats, and begin the overhaul that should have started long ago.

The world is repricing dependence, and SA is exposed

The obvious headline is oil. But the more important story is dependence. Brent crude jumped roughly 25% on 9 March, briefly pushing towards $120 a barrel, as the Iran war raised fears over supply disruptions and the Strait of Hormuz. Yet, the market reaction did not stop at oil. Aluminium rose, edible oils jumped, grain prices firmed, bond yields lifted, and expectations for rate cuts faded. This is the reality: It is not just an energy shock. It is a reminder that when the world turns hostile, everything built on cheap transport, cheap inputs, and calm supply chains suddenly becomes more expensive.

This is why the war matters differently across economies. The United States will still feel pain at the pump, but it is cushioned by domestic oil and gas production. Europe and much of Asia are more exposed because they remain more dependent on imported energy and vulnerable shipping routes. At the same time, Europe is already adapting to a harsher world. Germany is exploring a Japanese-style, government-backed structure to secure critical raw materials, while the European Union is moving towards stockpiling strategic minerals to reduce reliance on China. In other words, advanced economies are no longer asking only what is cheapest; they are asking what remains available when geopolitics interrupts the market.

China adds a different layer to the problem. Beijing has set a 2026 growth target of 4.5% to 5%, after achieving last year’s 5% partly through a record trade surplus of about $1.2 trillion. One part of the world is trying to secure inputs. Another is still relying on exports to absorb domestic weakness. Meanwhile, a war shock is now increasing the cost of energy, freight, and industrial production. The old global model assumed efficiency would always be rewarded. The new one is teaching a harsher lesson: Resilience is becoming an economic asset in its own right.

South Africa (SA) sits uncomfortably on the wrong side of that divide. Our domestic refining base has shrunk sharply, only two crude refineries are operating, and the country imports about 75% of its liquid fuel needs. That makes SA highly exposed not only to crude itself, but also to shipping costs, refining bottlenecks, and rand weakness. Before this weekend’s oil spike, local reporting based on Central Energy Fund data already suggested April fuel hikes in the region of R2.28 to R2.41 a litre for petrol and R4.39 to R4.50 a litre for diesel. After Brent’s latest surge, those numbers no longer look dramatic; they look plausible.

Diesel is where the story becomes far more serious than a painful trip to the fuel station. Petrol is politically visible; diesel is economically pervasive. It shapes the cost of freight, agriculture, mining, construction, and backup power. That means a diesel shock works its way into food prices, goods prices, and margins long after the initial jump in oil. Add a weaker rand and the inflationary effect broadens further. The South African Reserve Bank will likely redraw its adverse scenario before its meeting on 26 March because the old one has already been overtaken by events. Governor Lesetja Kganyago stressed that exchange-rate weakness can hit South African inflation even harder than oil itself.

That leaves the Reserve Bank in an awkward, but revealing, position. SA now has a 3% inflation target with a tolerance band of 1 percentage point on either side, and the repo rate was left at 6.75% in January as policymakers waited for expectations to settle lower. In this context, external shocks matter a great deal. A pause now looks more likely than another cut. And if fuel, freight, and the rand start pushing inflation expectations away from that new 3% anchor, another hike cannot be ruled out. That is what makes this more than an oil story. SA is not only importing fuel; it is importing the consequences of a world that is moving from efficiency to security. And in that world, dependence carries a rising price.

This article has been published on Moneyweb.