Gauteng should pray for no escalation of Middle East conflict, says economist

Gauteng should pray the conflict in the Middle East does not escalate as this will have a direct impact on the province’s economy because of its exposure to global trade. This is the warning by Nedbank senior economist Isaac Matshego during his presentation at the CFO Roundtable in Sandton on Tuesday.

Matshego said Gauteng’s economy was linked to international trade and any disruption in global markets was felt most by the province.

“Gauteng, being a manufacturing and services economy, is dependent on the global economy. Sectors such as financial services and tourism, with global risks increasing, we will see these dropping. With manufacturing it is about disruption of the supply chain.

“If the conflict escalates, it will hit the global economy and then the Gauteng economy. This is what we experienced during the Covid-19 pandemic. With the hard lockdown at level 5, financial services stalled, manufacturing closed and with those two sectors dominating the Gauteng economy, Gauteng suffered more than the provinces more reliant on agriculture,” Matshego said.

At the weekend Iran launched an attack on Israel which included hundreds of missiles and drones after an attack on the Iranian consulate in Syria. These tensions have raised global concerns that the situation in the Middle East could get worse and negatively affect the global economy, he said.

The roundtable was hosted at the JSE, where CFOs signed a pledge to work with the provincial government to grow the economy and find ways of increasing investment.

The initiative was started in September 2023 with the aim of fostering collaboration between CFOs of major private sector companies in Gauteng and key government officials to grow the provincial economy. Gauteng contributes 35% of SA’s GDP.

The original partners in the initiative are the Gauteng treasury, Chartered Institute of Government Finance, Audit and Risk Officers, Standard Bank and the Chartered Institute for Business Accountants.

Gauteng finance MEC Jacob Mamabolo said the initiative was about building partnerships between public finance and the funds on the balance sheets of the private sector.

“We believe through dialogue and sharing ideas we can find each other and help each other grow the economy of Gauteng. We are excited about this initiative because it will enable us to work with our counterparts in the private sector in what is a pioneering effort to bridge the gap between government vision and corporate action,” he said.

“Through this initiative we are shifting the narrative from viewing economic growth and development as solely a government responsibility to understanding it as a collaborative endeavour between government, the corporate sector and other stakeholders for the benefit of all citizens in the province.”

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