If there’s one thing businesses planning to invest, expand and employ more people really want, it’s policy certainty. Put another way, unpredictable policy is almost always an investment and business confidence killer.
Exhibit number one is Donald Trump’s America, where the S&P 500 and Nasdaq Composite indices posted their worst quarterly performances since 2022 on Monday as uncertainty surrounding the administration’s economic agenda roiled equity markets.
Trump’s announcement on Sunday of a swathe of new “reciprocal tariffs” targeting “all countries” has raised fears of a global trade war that would hurt US economic growth and spur inflation.
Policy uncertainty has surged to an unprecedented level in SA too, according to the latest policy uncertainty index released by the North-West University Business School, which warns of intensified risk to economic recovery, investor confidence and long-term growth.
Yet local markets have been remarkably sanguine, seemingly untroubled by the political uncertainty caused by conflict in the government of national unity (GNU) over the budget, this year’s renewed energy insecurity, wavering fiscal confidence or the diplomatic falling-out between SA and the US.
One possible explanation is that the policy uncertainty in SA is an indication that change is in the air, and the only thing business dislikes more than policy uncertainty is bad policy.
While the GNU is looking shaky, that is in large part because the ANC is discovering that losing its majority in last year’s election has consequences, among them being the need to compromise on bad policies it was dead set on steamrolling through.
Sometimes policy uncertainty can be a good thing.
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