Despite some volatility driven by trade concerns at the start of Trump’s presidency, and the launch of DeepSeek, January marked a strong start to the year for both domestic and global financial markets. A strong start to U.S. corporate earnings, combined with upbeat leading economic data and the continued easing of financial conditions amid the ongoing rate-cutting cycle, provided support for markets.
Domestic markets rebounded from an early-year sell-off, initially weighed down by global factors, to close the month on a positive note. Optimism around South Africa’s economic prospects continues to grow, with even the most pessimistic forecasts expecting GDP growth above 1.5% in 2025. More optimistic economists believe growth could easily surpass these estimates if the government successfully implements structural reforms in key sectors such as transportation, water infrastructure, and municipal governance—areas that have long been bottlenecks to economic expansion.
However, much of this economic momentum hinges on the stability of the Government of National Unity (GNU), which remains fragile. Tensions within the coalition surfaced following the signing of the Expropriation Act by the President, a move that has angered the Democratic Alliance (DA) and reignited concerns over the stability of the coalition. While the GNU has so far held together, political friction could derail reform efforts. Investors will be closely watching the government’s ability to navigate these challenges and maintain unity in the face of growing ideological divides.