South Africa’s 10-year bond yield reaches 10.75% due to fiscal policy issues and global uncertainties. The Government of National Unity faced unprecedented budget delays due to opposition against VAT increases. Although the country avoided a recession with a 0.6% growth, structural economic challenges persist amid international financial pressures.
South Africa’s 10-year government bond yield surged to 10.75%, marking its highest level in nine months. This increase comes amid growing concerns regarding fiscal policy and uncertainties in the global economy. The situation is further compounded by the recent political challenges faced by the new Government of National Unity (GNU).
Notably, this government was unable to present its first budget, which is unprecedented in post-Apartheid history, due to opposition from the Democratic Alliance (DA) and other coalition members against a proposed 2% increase in the value-added tax (VAT) rate.
The global context has shifted significantly in the past month, especially following US President Donald Trump’s withdrawal of $1.4 billion in funding and rising trade tensions. Despite these challenges, South Africa managed to avert a technical recession in the last quarter of 2024, demonstrating a modest economic growth of 0.6%. However, this growth is still considered insufficient to address the country’s deep-rooted structural issues.
South Africa’s bond yield rise to a 9-month high reflects critical fiscal challenges, underscored by the GNU’s budgetary delays and external economic pressures. While the country has sidestepped a technical recession, it remains plagued by weak growth, highlighting the need for urgent structural reforms to ensure sustainable economic development.
Original Source: www.tradingview.com
