If we agree that 2024 was the great election year as more than half of the world hosted elections, then an argument can be made that 2025 is the great policy year capturing the implications that newly appointed governments will have on the economic outlook in the medium term. To help us understand her take of how policy may unfold, CNBC Africa is joined by Sanisha Packirisamy, Chief Economist, Momentum.
And if we all agree that 2024 was the great election year as more than half of the world hosted elections, then an argument can be made that 2025 is the great policy year capturing the implications that newly appointed governments will have on the economic outlook in the medium term in terms of the policy that they will be bringing to the table. But to help us better understand her take on how policy may unfold and impact the economy as well as the financial markets, I'm joined by Sanisha Packirisamy right now, Chief Economist over at Momentum. Sanisha, thanks so much for your time. So what we did see last year is a lot of governments that failed in alleviating the cost of living crisis faced by their citizenry who were tired of high prices and tired of high interest rates being given the boot. We saw that from the likes of Europe as well as here in Africa. Perhaps the boot in South Africa was a little bit different just given the fact that the incumbent party still stayed, but stayed with a lower majority than it was used to. But the picture, of course, in the US is completely different with the Democrats soon packing right now. Just your take then, your broad view take on the economic outlook for 2025 as we do see some of these policy changes coming into place. So lovely to see you again, Pipi. You know, as you correctly mentioned, you know, last year, we had one of the highest number of political elections taking place. And out of the 72, the majority of the developed market economies saw the incumbent political parties, as you say, getting the boot. And it was largely, you know, boiling down to two factors that citizens were unhappy with government's response to the cost of living crisis. And secondly, they were also quite unhappy with immigration policies that put quite a lot of stress on economies worldwide. And I think going into 2025, as you correctly say, this is going to be the year in which nations start to recalibrate those policies and priorities. And we will also start to see quite a lot of power structure shifts. As we go into 2025, I think there'll be a lot of redrawing of boundaries, as we've seen with Trump making statements on places like Greenland, Canada and the Panama Canal. And so going into 2025, we will see the repercussions of those political incumbents getting the boot and seeing how new governments tackle, you know, the old challenges of economic growth, poverty, climate change, technological advances and how these impact the world economy. So I'm going to be speaking with the World Economic Forum in just a short while. They surveyed some of the top chief economists in the world. I'm sure you were in there as well. But just talking about how they were feeling about the fortunes of the global economy this year and the majority were still a bit concerned about the fragility of the global ecosystem. So let's start off with your view then of Trump at 2.0. He's coming into office officially in the next four days or so, I think. Good or bad for economic fortunes? And perhaps maybe we can actually dig deeper in terms of which economic fortunes he could be positive for and which economic fortunes perhaps you are feeling a little bit nervous around. Well, that's exactly what I was going to say, Pippi. I think, you know, it's in the eye of the beholder. So if you are a US citizen, you're likely to face reasonably good growth over the next while, given that Trump policies are likely to extend this period of growth exceptionalism for the US. So things like the, you know, the tariff arrangements that he wants to put through, you know, the tax cuts, the deregulation, these can all be quite positive for corporate profits, as well as for the ordinary consumer in the US economy. Whereas, you know, if you look across the Atlantic and you go into Europe, they're not sitting in such a great position. So growth in that area is probably going to be sub 1%. There are currently six countries in the Eurozone that either have a caretaker government or still trying to formulate a government. And so that means that political concerns are still going to dampen economic growth outcomes in Europe. We've also seen that, you know, the manufacturing sector in Europe, particularly in Germany, hit quite a slump. And so those countries are still going to be reeling from the after effects. We've also seen, you know, that consumers have taken significant strain over the last while because of the cost of energy prices that has dampened consumer spend in that region. And if you go over across to the east, and we look at China as an example, here we are also expecting growth conditions to soften on the back of consumer sentiment, which remains in the doldrums, given that government has put forward policies to patch up economic growth, but none that really address the issue of not having an adequate social safety net. We're also still seeing, you know, complete weakness coming through in the housing market over in China. And add to those woes are the, you know, increased protectionist stance of the U.S. administration. And that is also likely to bear negatively on Chinese growth this year. South Africa's growth, I mean, you touched on a point that we're going to be hearing from in just a short while regarding the formulations of governments of national unity. You spoke about the fact that in Europe, there are still countries there that have got caretaker governments, because, I mean, negotiations are still taking place behind closed doors. South Africa was a different case, and some are even heralding it as a positive, the fact that we were able to bring a GNU together in the short space of time that we were. Outlook for GNU and the trust factor that you have on it actually succeeded in staying together and reforming the economy. Shios, I think, you know, 2024 was quite a political upheaval in South Africa with a lot of political uncertainty baked in. 2025 will see some consolidation in the government of national unity, given how the parties are currently performing. I mean, we see, you know, the occasional public spat, but we are expecting that the government of national unity hangs together for now. I think that political uncertainty and policy uncertainty starts to re-escalate by the middle of 2026 when we face the local government elections. I think this will be the real litmus test for the GNU and whether or not citizens believe that they did, in fact, deliver on issues of service delivery and, you know, weak areas of the economy. Going into 2027, this is the point at which we'll get, you know, the new leader for the African National Congress, and so we could be in for a period of political uncertainty between 2026, second half, going into 2027. But I'd say, by and large, 2025 is seeing some gains coming out of the government of national unity. There is a sense of goodwill about the GNU, not only locally, but also globally, and I think that gives parties enough ammunition to say that we need to come together to put the policies in place on the economic platform, on the jobs platform, as well as on the fiscal platform. But as I say, going into 2026, that's another ballgame, and I think, you know, the real litmus test will be the local government elections. So much to talk about then in the road to 2026, but Suneesha, we're going to have to leave it there for now. Thanks so much for your time, great to connect with you for the first time in 2025. Suneesha Pakkarisamy, the Chief Economist over at Momentum.
Theme: The impact of policy changes on the global economic outlook in 2025
The year 2024 was marked by a wave of political elections around the world, resulting in a significant shift in power structures as many governments were ousted due to their failure to address critical issues such as the cost of living crisis and immigration policies. As we transition into 2025, the focus is now on the policy changes and priorities that newly appointed governments will bring to the table and how these will impact the global economic outlook. Sanisha Packirisamy, Chief Economist at Momentum, sheds light on the anticipated economic landscape for 2025 and the potential implications of these policy shifts. Packirisamy highlights the challenges faced by different regions, from the US to Europe and China, and provides insights into the economic prospects for each area. She also discusses South Africa's unique situation with the formation of a government of national unity (GNU) and the trust factors influencing its success. The road ahead to 2026 is lined with uncertainties, particularly as the country gears up for local government elections. Overall, 2025 is expected to be a year of recalibration and consolidation for many nations, setting the stage for future political and economic developments.
"2025 is expected to be a year of recalibration and consolidation for many nations, setting the stage for future political and economic developments."
['2025 economic outlook', 'policy shifts', 'global implications', 'government of national unity', 'economic landscape']