Tito Mboweni pleads for speedy resolution to US-China trade war
The finance minister says SA will use the WEF Africa meetings this week to focus on the African continental free-trade agreement
Finance minister Tito Mboweni has called for a quick resolution to the trade tensions raging between the US and China, the world’s two biggest economies.
Both countries imposed more tariffs on each other last week, renewing concerns over slower global growth.
Mboweni said at a briefing ahead of the World Economic Forum (WEF) Africa meetings this week that the event served as a platform for an exchange of ideas on the state of the global, African and SA economies.
“The biggest issue is the global trade tensions which are consuming the world. The trade war between the US and China is not helpful and is affecting the markets generally whether it’s the commodity markets or the currency markets,” Mboweni said.
“The issue of trade tensions is a very important one for us ... the message must get through especially to those in Washington that the trade war is not helpful to us or to the global economy. The quicker these issues are dealt with, the better.”
SA will use the meetings this week to place its focus on the African continental free-trade agreement, which it stands to gain the most from, he said.
“SA stands to benefit far more from the Africa intercontinental free trade [agreement] because of our large industrial base through the production and export of manufactured goods. Against the background of the trade wars, Africans are organising themselves.”
WEF head of Africa Elsie Kanza said foreign direct investment has “increased on the continent at a time in the past three years when there’s been a decline globally”.
“There has been an increase of 100% between 2017 and 2018 with most of the deals happening here in SA,” she said.
The rand and other emerging-market currencies have been buffeted by trade war-related headlines in 2019, although the local currency has faced pressure from Eskom’s growing debt and a deteriorating local economic picture.
The rand was on track to snap a three-session losing streak against the dollar on Monday, benefiting from news that the Chinese would not immediately retaliate against the latest round of US tariffs, which took effect on Sunday.
The rand was 0.2% firmer at R15.20/$ on Monday afternoon, having lost 14.84% since its 2019 best of R13.2349 reached on January 31.