Speaker 1: The Money Show with Steve.
Speaker 2: Well.
Speaker 1: Let's talk uncertainty now. The Northwest University Business Schools Policy
Speaker 1: Uncertainty Index moderating a little in the second quarter from
Speaker 1: the record high in the first quarter, mainly, I suppose,
Speaker 1: because the first quarter was dominated by Trump and tariffs,
Speaker 1: and you remember how scary all of that time was.
Speaker 1: Professor Raymond Parsons is the person who helps to put
Speaker 1: the index together, an economists at the university or at
Speaker 1: Northwest University's Business School. Almond, A good evening. I mean,
Speaker 1: so much has happened over the last few months. I
Speaker 1: suppose it's easy to forget just how unsettled, how uncertain
Speaker 1: the first quarter of the year was. But what changed
Speaker 1: from the first quarter to the second quarter?
Speaker 2: Oh, good evening, Stephen. And as you're right you say
Speaker 2: the first quarter is the benchmark, because that was the
Speaker 2: record high for our policy Uncertainty index over the nine
Speaker 2: years that we have been in fact trying to see
Speaker 2: what's the level of uncertainty has been in our economy.
Speaker 2: So the two major factors, firstly external, as you rightly say,
Speaker 2: was the shock, the first round of shocks of the
Speaker 2: tariff which were announced by the White House. But internally,
Speaker 2: Remember also in that quarter, the first quarter, we had
Speaker 2: the uncertainty around the first time that a South African
Speaker 2: budget was not introduced on the day in which it
Speaker 2: was scheduled and would be postponed, and as we know
Speaker 2: what happened over the second and the third rounds of
Speaker 2: that budget. So that explained the high record level of
Speaker 2: the p UI in the first quarter. But in the
Speaker 2: second quarter there's been obviously some easing, some changes in
Speaker 2: the tariff approach. We are looking now to the ninth
Speaker 2: of July for the next deadline, so several of those
Speaker 2: tariffs have been suspended until now all of them, so
Speaker 2: they're still a big cloud of uncertainty. And secondly, of
Speaker 2: course internally there have been both positive and negative factors,
Speaker 2: but on balance the total impact has been to say, yes,
Speaker 2: there's been an easing from the record level, but the
Speaker 2: level of policy uncertainty is still well in negative territory
Speaker 2: and is an issue that we need to address. And
Speaker 2: I say that with this caveat the external factors, there's
Speaker 2: not much that a small open economy can do about them.
Speaker 1: That has to.
Speaker 2: Respond to them, and it responds partly by addressing the
Speaker 2: factors over which it has control, namely internally, and in
Speaker 2: that process also builds some resilience in order to deal
Speaker 2: with any external shocks. So that's where we are now
Speaker 2: with the level of our policy uncertainty index.
Speaker 1: The sort of what happened towards the end of last
Speaker 1: week and over the weekend, the sort of moment where
Speaker 1: it looked like maybe the da you would pull out
Speaker 1: of the coalition government over the firing of Andrew Whitfield,
Speaker 1: I mean, has become a big story. I suspect it
Speaker 1: might rumble on for a while, but it seems to
Speaker 1: me that we can have quite a lot of uncertainty
Speaker 1: coming out of our politics still for quite a while,
Speaker 1: despite the fact everybody was so happy after the election, well,
Speaker 1: the business community was.
Speaker 2: Well, Stephen, I think a big picture is that if
Speaker 2: you're a business decision maker, you're probably saying to yourself,
Speaker 2: are we into a new normal of uncertainty or are
Speaker 2: we into a new abnormal of uncertainty. I don't think
Speaker 2: we quite know, given both the external and the internal factors.
Speaker 2: I would just make two points before I get onto
Speaker 2: your specific question, that what the data is telling us
Speaker 2: the economic data, and this is reflected to some extent
Speaker 2: in the PUI is that this economy is an incipient
Speaker 2: upturn which is battling to try and maintain momentum. We
Speaker 2: are battling, and you can see that in the reduced
Speaker 2: forecasts of growth, which are now down to about one
Speaker 2: percent for this year. We know that's not good enough,
Speaker 2: and we know what we need to do in order
Speaker 2: to create a more favorable in climate in order to
Speaker 2: engender the economic activity and the investment that we need.
Speaker 2: On the political side, it's clear that the markets and
Speaker 2: business want the GNU to succeed. They understand there will
Speaker 2: be hiccups, there will be tensions, and obviously we add
Speaker 2: news for the economy if the GNU was in any
Speaker 2: way to collapse. But the important point now is that
Speaker 2: from a business point of view, which is not party political,
Speaker 2: they simply say, if you want us to invest, if
Speaker 2: you want to growth more than one percent, you must
Speaker 2: offer us political stability and some degree of policy certainty
Speaker 2: that we in business who have to undertake big investments
Speaker 2: will know where we stand over the next few years
Speaker 2: in terms of the commitments we need to make. We
Speaker 2: can give the decision makers on the investment site that
Speaker 2: sort of assurance, and we can build on what we
Speaker 2: are trying to do in terms of accelerating reforms, getting
Speaker 2: the infrastructure spending translated into tangible projects on the ground,
Speaker 2: then we can do better. But the big message of
Speaker 2: the PUI is we're not there, and this economy is
Speaker 2: at the moment struggling to gain momentum to even reach
Speaker 2: the one percent growth for this year.
Speaker 1: The Trump factor in some ways, I mean, I'm sure
Speaker 1: you've heard the phrase at Tacko Trump always chickens out
Speaker 1: that things are never as bad as they sound. Could
Speaker 1: he have lost a little bit of his bite in
Speaker 1: some ways because people kind of know now that he's
Speaker 1: not going to do what he says he's going to do,
Speaker 1: He's going to do something a little less than that.
Speaker 2: Well, yeah, that's true, but it's combined with a very
Speaker 2: erratic approach. And this is the big problem that I
Speaker 2: think many decision makers and indeed the foreign policy experts
Speaker 2: has to grapple with. Yes, some cakes, they may be
Speaker 2: the bark is worse than the bite, but embodied in
Speaker 2: that is a huge level of unpredictability. You simply don't know.
Speaker 2: Take the Canadians, they thought they were working out something
Speaker 2: in the last few days with the United States. Now overnight,
Speaker 2: suddenly the White Houses said, no, we're going to take
Speaker 2: a retalient reaction because of some action you take. So
Speaker 2: this whole uncertainty around the fact that the rules based
Speaker 2: system has been abandoned, that it could easily generate into
Speaker 2: a beggar your neighbor policy. You simply don't know where
Speaker 2: you stand. So the important point from an external point
Speaker 2: of view is you will have to develop internal your
Speaker 2: internal policies to be able to cushion you against some
Speaker 2: of this uncertainty. But from the South African point of view,
Speaker 2: the important issue is there are factors under our control
Speaker 2: that can make a difference to economic performance. And so
Speaker 2: those external issues over which we can exercise very little
Speaker 2: control except to react or respond to them, we've got
Speaker 2: to say, what is the unfinished business of the GNU
Speaker 2: agenda that will give us the impetus, the acceleration, the
Speaker 2: push that we need to translate what we've said we
Speaker 2: are going to do into a much better economic performance
Speaker 2: underpin by the investor confidence that we need, and in
Speaker 2: that process reduce the policy uncertainty which has bedeviled so
Speaker 2: many of the investment plans that we've heard about in
Speaker 2: the past.
Speaker 1: Professor Raymond Parsons, thank you very much. Indeed, from Northwest
Speaker 1: University's Business School,