Q&A: 2026 and beyond – US dollar doubts and commodity clout

Q&A January 2026

Let's start with politics – we are now a year into Trump 2.0 and he's certainly kept the world on its toes. What should we be looking out for in year two?

AP: International relations have become more turbulent as we move into a multipolar world. Trump is just a further catalyst. I do believe, however, that President Donald Trump has been the best medicine for Europe – he is forcing fiscal union, which would otherwise have taken decades to achieve.

AB: I see three swing factors: one, an evolving tariff playbook as the Trump administration looks for alternative legal routes if presidential tariff powers are curtailed; two, pressure on the Fed around leadership transition and rate policy; and three, geopolitical interventions (Venezuela/Iran/Greenland) that keep risk premia jumpy – though markets often fade the shocks.

CH: Much of the same. The US midterm elections are key; it seems likely that the Democrats will win the House – at which point we can expect Congress to attempt to rein Trump in, and for him to resist. I suspect the Supreme Court is going to be kept busy.

OM: I believe what we should be looking out for is how he navigates his economic and foreign policy agenda within the context of the upcoming midterm elections. The Republicans currently enjoy a US government trifecta (holding the House, the Senate and the Presidency simultaneously). A disruptive policy that either increases inflation or reduces economic growth is typically negative for the incumbent's election outcomes.

BS: We should be looking out for the consequences of his policy choices and actions. The market has seemed to look through the noise in the short term, but there will undoubtedly be reactions, both in the economy and in global geopolitics.

BK: More of the same from Trump, but with a less supportive Congress and less scope for executive action. Trump may not be able to offer support to the Republican Party at elections.

Given Trump's actions in Venezuela and his other territorial ambitions (such as Greenland), what are the implications for international relations?

OM: His foreign policy ambitions seem to have the ultimate agenda of re-establishing US hegemony across the world. Globalisation may have enabled other countries to participate more meaningfully in the global economy at the expense of US industry, and perhaps he seeks to restore the "old" world order. This will increasingly disrupt international alliances and may lead to the establishment of new alliances.

CH: I may be wrong, but I suspect the Greenland fracas is designed to get Europe to arm Greenland, rather than for the US to take control. Even so, I suspect there will be less trust in the US as a strategic partner, which may further chip away at US dollar dominance.

AB: Expect higher geopolitical noise and selective use of economic statecraft (tariffs, sanctions, export controls). Near‑term market impact has been contained, but policy unpredictability raises headline risk.

BK: The nations need the US much more than the US needs alliances. Perhaps the message is: live with the bully and hope for a friendlier successor.

The US faces mid-term elections this year that could flip the House and/or the Senate. Given that Trump can't stand in 2028, how does this shape the political outlook in the US this year?

AB: With Trump term‑limited, party positioning shifts to potential 2028 successors. A mid‑term flip in one chamber would constrain fiscal/industrial policy and intensify executive‑branch reliance on unilateral trade and regulatory tools.

OM: I don't believe Trump wishes to disrupt the Republican agenda, and he will seek for the Republicans to retain control of the Presidency in 2028. Thus, the political outlook would likely have continued Republican success at the centre, for example, his push to lower inflation while simultaneously growing the economy. This bodes well for the Republicans in the future.

BS: A divided Congress could bring some balance, but it also means a lower chance of fiscal packages and greater policy uncertainty.

BK: It reduces the power of Trump, as indicated. And the power to nominate his successor. Glenn Youngkin, the outgoing Republican governor of Virginia, looks very electable.

One key to the midterms is the state of the US economy. What are the likely growth, employment and inflation scenarios and how could these determine the outcome?

AP: Trump will struggle to successfully tackle affordability this year. This will cost him in the mid-term elections and will see greater restraint on his future fiscal spending plans.

AB: I see growth around 2%, with a cooling labour market but supported by artificial intelligence (AI) capex and wealth effects. I see inflation at about 2.9% on average, with goods pass‑through from tariffs a risk. Unemployment will probably edge higher but will be cushioned by wages. The likely outcome for midterms will be a softer economy with a sticky "super‑core", which could favour opposition gains in close races.

CH: The US economy appears to be growing strongly. It's hard to reconcile the growth rate with the weak labour market, though. Perhaps AI is affecting hiring as companies hold off until they see what productivity gains are possible. Inflation remains above target and I suspect will continue to be above target for the foreseeable future. One big question is what will happen to the deficit if the broad-based tariffs are ruled illegal. There may well be substitute tariffs, but uncertainty will continue to ratchet higher.

BK: The economy is hot and will remain so, despite a weakish labour market. Trump will take many direct actions to hold down prices (e.g., electricity, gasoline, mortgage rates, short-term interest rates, lower personal taxes, etc.) to improve affordability. This is not free market economics, nor does it imply an independent Federal Reserve. It all portends dollar weakness, as we have seen already. Less regulation means more supply and lower prices, other things equal.

OM: The labour market in the US seems to be dislocating. We are seeing some evidence of excess labour supply (i.e., more people seeking work than jobs available). This will likely be negative for wage growth and, ultimately, consumer spending, and hence will likely harm economic growth. The key determinants of electoral fortunes are the state of the economy and the cost of living.

BS: The K-shaped economy (upper-income groups doing well, lower-income groups less so) is a real thing and while employment has been cooling, inflation seems sticky. Growth continues, but I sense that it is not broad-based.

NU: It's hard to know, but my strong guess is that the politicians will risk inflation to keep the economy strong into the midterms. The risk of inflation is probably understated.

On the trade front, while Trump scaled back some of his tariffs in 2025, they remain high by historical standards. How do you see tariff policy affecting global growth and inflation in 2026?

OM: The lagged effects of tariffs remain front of mind. Consensus forecasts of inflation for the US over the next two years remain elevated at 2.8% (2026) and 2.5% (2027). This is well above the Fed target of 2%. It will be difficult for the Fed to cut interest rates in an environment of elevated inflation and robust growth unless more concrete evidence of a weakening labour market comes through.

AP: Tariffs will keep uncertainty high, making business decisions difficult. Growth so far has been strong thanks to tariff front-running (e.g., pre-emptive stocking by importers), and we will have more clarity this year about how much of the current global growth comes from that or from the easier monetary policy seen last year across the globe.

AB: Effective US tariffs (about 11.5% on actual flows vs about 28% announced) remain elevated vs history, and could keep global growth below trend (The IMF forecasts global growth of 3.1% this year) while adding modest goods‑price pressure. Some disinflation in 2025 came from diversion/stockpiling; that tailwind fades in 2026.

CH: Long term it may well benefit global growth as other countries strike free trade agreements among themselves to offset lower US demand. Over this year, I suspect it may dampen inflation in countries outside of the US as they redirect goods that would have gone to the US.

BS: Uncertainty discourages long-term investment. We are still waiting for the US Supreme Court to rule on the legality of the tariffs.

BK: The outcome is not obvious, given exchange rate management by the Chinese and producers absorbing the impact of tariffs. A less free-trading world is not helpful. But it was one-sided free trade as Trump has complained about, which was good for US consumers but tough on US manufacturers and their workforces.

What is your view on US-China relations in 2026 (stabilisation vs renewed escalation)? How would this manifest in the different "transmission channels": e.g., chips/AI supply chains, currency, commodities, shipping/logistics and capital flows?

CH: They are both still important for each other's economies, but there has been some degree of decoupling. Competition between the US and China is likely to be the key geopolitical theme for the next five years at least.

AB: Base case: uneasy stabilisation with episodic flare‑ups. Transmission by: chips/AI (export controls and rare earths leverage), foreign exchange (mild US dollar softness vs a broadly stable Chinese yuan), commodities (metals supported; oil less so), shipping (fragmented lanes), and capital flows (selective outbound restrictions).

BS: It feels like controlled tension. I believe both sides realise they need each other, even if only for the medium term.

NU: China will continue to play the long game, slowly divorcing itself from the US and looking to become the global leader over time. Commodities, I believe, will stay strong, but the rate of appreciation will moderate. Long-term, the Chinese currency will strengthen. The US risks losing leadership and global leadership status – though this may take longer than the market and current narrative suggest, as the US remains, for now, the global leader.

In the light of the above, what is your view on the growth outlook for China in 2026?

AP: Chinese growth will need significant government stimulus – last year's growth was mostly from tariff front running and the stimulus from last year was not enough to lift the economy out of its growth slump. To achieve the same growth rate this year, we will need to see double or triple the stimulus numbers from last year, as well as further rate cuts.

AB: Structural headwinds from property, demographics and weak domestic demand will persist. Growth should be about 4.5%, with policy leaning into tech self‑reliance/manufacturing. Deflation risk lingers because of excess capacity.

CH: Growth is still likely to be good (>4%) for now, but China does face several structural headwinds. The most pressing among them is demographics. The Chinese population and working-age population are in decline and are set to decline further. It seems to be an insurmountable issue that will be a headwind to growth.

BS: I see continued policy-supported growth. Property could be close to a bottom, based on historical references to other property market crashes (excess inventory could be close to done), this could be beneficial for resources/base metals.

BK: With the Communist Party in charge, the growth outlook will remain subdued. The party will make poor decisions about resource allocation, as in the past.

Which current geopolitical flashpoints are most likely to matter for markets in 2026?

BK: Taiwan will always be a flash point, as will Russia. Will European countries build their deterrence? One hopes so – at the expense of their overwhelming welfare states.

AB: Key ones to keep an eye on are: Iran/Gulf oil supply, the US-China tech/trade, the Russia-Ukraine endgame and US episodic interventions by the US. An oil shock is the most direct inflation/growth risk; otherwise, markets have quickly faded single‑day shocks.

CH: Taiwan is at the top of the list. Sudan sucking the broader Middle East into a conflict probably can't be ruled out either.

OM: Geopolitical flashpoints will likely be noisy throughout the year, but what will likely matter most for markets is if those geopolitical events influence a) oil supply and oil prices and b) global supply chains. If geopolitical events influence either of those, that will likely lead to higher inflation.

BS: Russia-Ukraine, US-Iran, China-Taiwan, US-Greenland. One of the most active periods I can recall.

Let's look at inflation and central banks. What is your base case for inflation in 2026: does it cool, plateau or re-accelerate?

AP: Inflation will be constrained by growth in the coming year, so I do not see massive inflation in the US, particularly if Trump is more constrained in his spending. The rest of the world's stronger currencies against the US dollar should act as natural brakes on inflationary pressure.

AB: My base case is cool to plateau. Global inflation will likely drift lower on weaker oil and fading goods pressure. In addition, services are likely to decelerate slowly. Developed-market inflation will be near targets, and emerging-market import disinflation will help.

CH: US inflation ticks up, global inflation ticks down.

OM: Inflation has, by and large, moderated across countries. Most central banks are at the tail end of their easing cycles. There hasn't been a significant ramp-up in demand to suggest a demand-driven inflation problem – growth remains weak in Europe, for example. Fiscal stimulus may boost demand, but it is too soon to tell. An acceleration in inflation will likely be driven by a supply-side shock, given that demand-side dynamics remain relatively weak.

NU: I see moderate re-accelerations, but I do worry about the integrity of the data.

To what extent can central banks cut rates in 2026 without reigniting inflation and to what extent would they tolerate sticky or rising inflation?

BK: The puzzle is the Fed. The dual mandate allows it to cut, given the labour market slack (largely the result of AI). As said before, direct Trump actions, such as getting oil from Venezuela, putting pressure on mortgage rates, offering tax rebates, etc., can help improve affordability – a key Trump objective – while the economy remains "hot" (in Trump's words).

AB: I see a Fed baseline of 3% to 3.25% by end‑2026, while the European Central Bank (ECB) is likely to remain on hold near 2% and the Bank of England is likely to be cautious on easing. The Bank of Japan is on a path of gradual normalisation to about 1%. The scope for cuts is measured overall given the "sticky" service numbers, but the tolerance for modest overshoots is higher if growth softens.

CH: Some central banks (e.g., ECB) have already cut and probably have limited scope for further cuts. The big question is the US, where there is scope for limited cuts (a quarter to half a percentage point).

BS: I think there may be potential for more aggressive cuts, where there is a dual focus on employment and inflation. For markets where central banks focus completely on inflation, I think the scope will be limited to one or two cuts.

NU: I think they are likely to take the risk and look to financial repression as the only option realistically available in the absence of an AI miracle.

The Federal Reserve faces another issue this year – the appointment of a new Fed president and the likelihood of increased pressure on the central bank from the Trump administration. What could this mean for rates and the inflation outlook?

OM: Ordinarily, it should be a non-event given the composition and voting structures of the US Federal Open Market Committee (FOMC). However, given the increasing political noise around the appointment of the Fed chair, there is some risk to the Fed's credibility. Our base case is that the Fed remains a strong, independent institution, however.

AP: Trump will fail to capture the Fed completely and bond markets will relax once they realise that. We must remember that every US president has appointed his own people to the Fed board during his term, so the Fed has never been completely independent.

AB: Powell's term ends May 2026 and a more dovish successor, plus political pressure, creates risks of looser-than-otherwise policy, adding steepening pressure to the Treasury yield curve and risk of more persistent inflation expectations if independence is questioned.

CH: Not too much for now. It will be only one person trying to convince the rest of the board to cut. It seems the Supreme Court is opposed to Trump being allowed to make sweeping changes at the Fed, so much of the status quo will continue, especially if Jerome Powell stays on the board.

BK: Other things equal it means higher rather than lower inflation – and a weaker US dollar.

Governments face significant fiscal pressures in 2026. Will markets allow debt-to-GDP levels to continue to rise in the leading economies?

AB: Advanced economy debt ratios are elevated, and yield curves have already steepened on supply/term premia. Markets will fund at a price, i.e., a higher long-end yield, but with greater sensitivity to fiscal slippage and differentiation across credits.

CH: I think this is going to be one of the key questions for markets over the coming couple of years. There is some risk of bond yields rising, but presumably that will prompt central bank intervention. The ultimate risk may well be higher inflation.

BK: Yes and more bonds will be issued to pay off bonds maturing. The US debt will not be extinguished but rather tolerated.

This is a particular issue for Europe (and the Eurozone in particular). It also faces the prospect of no longer having the US as a political and economic ally. How will the region manage these challenges in 2026?

AP: Europe is not highly indebted (except for France and the UK), so there is scope for an increase in the debt levels to facilitate infrastructural spending and to help European growth recover over the next 10 years. As stated earlier, I am excited about the closer ties between European countries and the likelihood of fiscal integration on certain pan-European projects.

AB: Growth is currently subdued, but there are higher defence outlays and public investment support. Policy uncertainty (French spreads), export headwinds (US tariffs, Chinese competition) and fiscal constraints argue for a more pragmatic consolidation and incremental industrial policy.

BK: Not comfortably, given the leadership vacuums. Immigration will need to be controlled for parties to be re-elected. Look for more influence from the European right, including the UK.

CH: It's not an issue for Germany, which has ample scope for ramping up stimulus and defence spending (which is the base case, I suspect). Even so, we can expect European countries to try to improve trade with the rest of the world to offset the US.

BS: Probably more fiscal support and further defence spending packages.

Big tech once again soared to new heights last year. Is this sustainable? Does the artificial intelligence (AI) boom still have legs?

AP: A closer look at equity market performance last year shows that tech shares (as represented by the Magnificent Seven) topped out in the third quarter. That said, the defining economic force of 2026 will not be politics, but productivity and artificial intelligence (AI) remain the most credible mechanisms for lifting trend growth in a mature, demographically constrained economy. This is no longer a theoretical story and AI-related capital expenditure is likely to accelerate further in 2026, even if total spending undershoots the most ambitious hyperscaler projections. However, one should bear in mind that AI will replace jobs, which will detract from GDP growth, and productivity will have to ramp up significantly to fill the GDP shortfall in the near term. This might lead to uneven growth at first.

AB: AI is a genuine productivity lever, but valuations are currently stretched. Therefore, if productivity/earnings disappoint, a sharp tech drawdown is a key tail risk for wealth effects and broader risk appetite.

CH: I think we're now on the second stage, where we start to see the impact of the deployment of AI. Exciting times. The best returns may well come from companies that deploy AI, rather than those behind the tech.

BS: Leadership will narrow and there will be a greater focus on profitability (or reduced profitability) as a result of overspending to maintain market share/be in the game.

BK: A profoundly important development for economies: the best adopters will grow fastest. And the best companies that deliver and use AI will be valued accordingly.

We've heard a lot about US exceptionalism in the last couple of years. To what extent is this a valid observation in 2026 and how should investors be positioning their portfolios?

AP: US exceptionalism is a myth in my mind – the US has had close to $5 trillion in tax cuts and stimulus since Trump 1 and this has led to massive stimulus and support for an economy that will now only see stimulus by way of a weaker US dollar.

AB: It's still partly valid (AI capex, earnings, dollar liquidity), but it's less of a one-way story. Tariffs, governance concerns around the Fed and fiscal deficits temper the story. This probably calls for portfolio diversification. In other words, to diversify away from US growth exposure by adding quality global cyclicals and emerging markets/bonds that benefit from a softer US dollar.

CH: I think there are increasing questions around the safe-haven status of the US dollar. In addition, even after the recent weakness, the dollar remains strong on a long-term basis, and we expect further weakness. The US market is expensive too, so I think there is a strong argument for being underweight the US at this point.

BS: Whenever these types of phrases are used widely, it is usually the endpoint of the specific theme. Nevertheless, the US provides fertile ground for innovation and growth. The most important question is how much you are paying for that growth.

On a related topic, up to recently, we had experienced a lengthy US dollar bull market that lasted close to two decades. I believe there may be short-term rallies for the US dollar, but in the longer term, I expect further dollar stability, or possibly even weakness. There are greater opportunities for growth outside of the US because of the very low bases set both in terms of valuation and growth potential.

BK: The US business sector is exceptional – the best managers and the best investors will sustain their superiority – and Trump's deregulation will be helpful.

There were spectacular gains for many commodities in 2025, with precious metals doing especially well. Can this continue into 2026?

AP: The shift will probably be out of gold (it has run as a Trump hedge) into copper and other industrial commodities, due to countries stockpiling commodity reserves.

AB: Precious metals (gold/platinum group metals) are likely to outperform on the back of safe-haven demand, central bank buying and currency debasement fears. Currently, industrial metals still look good, especially copper (AI data centre wiring/power buildout and structural deficits). The outlook for bulk metals is currently neutral to bearish.

CH: If the dollar does continue to weaken, then commodities will likely do well.

NU: The war for resources is real – I'm less sure about gold, which looks like a crowded trade.

Will energy markets behave in 2026?

NU: Yes – but electricity costs in the US are worth watching, and the implications of Canada's reluctance to agree to a long-term supply arrangement with the US on uranium should not be underestimated.

AP: Iran is the big wild card for an oil shock.

AB: The base case is for the Brent crude to be around US$60/barrel, with surplus building as OPEC+ unwinds cuts. Pressures should tend to the downside unless there's an Iran-linked shock.

CH: Probably. The US administration seems intent on keeping energy prices low and will do whatever is in its power to do so.

BS: Most forecasters expect weaker prices in the short to medium term, but energy markets can turn quite quickly and the risk of an extended conflict with Iran could cause short-term supply issues.

BK: They will behave. And I believe countries with expensive net-zero plans will become uncompetitive in energy.

Based on the above, what are the implications for the different asset classes – equities, bonds, currencies and commodities?

BS: Emerging markets are becoming increasingly more attractive vs developed markets, and there's a possibility of a commodity rally broadening, particularly if the Chinese property market is close to bottoming – remember markets are forward looking and could start discounting this before it happens. Further to this, the energy transition and AI energy requirements are commodity-intensive.

AB: Let's look at the asset classes:

Equities: late‑cycle but supported by lower rates and AI capex. Watch tech valuation risk.

Bonds: Developed-market curves are likely to steepen on supply/term premia, and selected emerging-market local bonds are likely to benefit from a softer dollar and disinflation.

Currencies: Mild US dollar weakness. This will likely support emerging market currencies like the rand.

Commodities: Precious metals still up (but not as much as last year), copper still firm, and oil range-bound with downside risks.

CH: We expect global equity market returns to be weak, but with wide dispersion across countries. Same with bonds. We expect the US dollar to weaken, rest-of-the-world (excluding the US) equities to outperform the US and for commodities to remain strong.

NU: Looking at the asset classes, I see the following:

Equities – these are risky, but selective parts will do OK – and it should be another good year for active.

Bonds – a flat year as forces balance each other out.

Currencies – emerging market currencies may have a bit to go. However, we should remember that the US dollar is still the go-to in an emergency/crisis.

Commodities – the precious metals story to fade and we look to the broader commodity complex.

Which are the markets/geographies to watch in 2026? Developed or emerging markets?

OM: Emerging markets should benefit from the current commodity supercycle, particularly resource-exporting nations like South Africa. This supports fiscal and growth outcomes, and desirable resource allocations by emerging-market governments should be good for their markets in general.

AP: Europe and Japan need watching as diversification plays away from the US and dollar assets, but it will not be smooth sailing. Strong currencies will be a constraint on emerging market equity performance.

AB: Emerging market local debt (incl. South Africa) should benefit from improving terms of trade and lower US rates and Japan (policy normalisation on the fiscal front, governance).

CH: Frontier! Africa finally appears to be delivering strong growth, hopefully, it will be sustainable.

BS: I think we could see broad-based upside, particularly if central banks are accommodative. There is a greater margin of safety in Europe, Japan, and emerging markets. Any further US dollar weakness will help them as well, in terms of US dollar returns.

What are the sectors to watch? Look at cyclicals vs defensives, growth vs value, offshore vs local, industrials vs resources, bonds vs equities, tech, etc.

AB: Cyclicals with pricing power (select industrials), quality defensives (healthcare), data infrastructure/semis adjacencies (power, copper proxies), property where yields compress with rates. Be selective in banks/retail (competition, margins) and underweight bulk miners vs overweight precious/energy transition metals.

CH: Staples. Other 'boring' sectors that will see a new boost in return-on-investment from AI deployment.

BS: I think selective growth, more broad-based value/cyclical. Tech is tricky, and we are seeing quite aggressive deratings in SaaS companies, e.g., Adobe, Intuit, and Constellation, with the market preferring the more cyclical side of tech, i.e., semiconductors. This could change quite quickly if AI return-on-capital benefits are questioned and spending slows.

NU: In short: value over growth for another year; offshore emerging markets; South Africa (if we get the rate cuts we need); quality to make a comeback in the second half.

The crypto market was weak at the tail end of 2026, despite what some would argue were good fundamentals for the asset class. What does 2026 hold in store?

AP: Crypto should be monitored as an indicator of risk sentiment. So it will only recover if the animal spirit in the market is revived. It might be a story for the second half of the year.

AB: Crypto has a high beta (is closely linked) to global liquidity and risk sentiment. Likely will be choppier in 2026 as rates fall gradually and tech valuations recalibrate.

BK: Gold has served investors better than crypto, but the gold should be in your own vaults, not kept in Fort Knox. I sense that gold will hold up and perhaps even move higher.

What are some of the other trends/themes we should be keeping an eye on in 2026 that could have an impact on investment? (eg. technology, healthcare, cybersecurity, demographics, climate, etc.)

BS: AI should create opportunities for healthcare advancement and climate risk management, but on the flip side, there is an increased risk of cyberattacks.

AB: Some trends to watch: AI diffusion/productivity, healthcare cost dynamics, cybersecurity spend, demographic fiscal pressures and climate transition capex (grid, transmission, copper).

CH: Africa, geopolitics, deployment of AI.

What are some of the "wild card" events (we could call them black or grey swans) that could shake up markets in 2026 – both good and bad?

AP: The wild card for me this year is if Trump raises taxes or closes tax loopholes – he might disguise it as something else, but the deficit needs to be closed and Trump is ultimately a populist.

AB: Good: faster ceasefire in Ukraine (oil supply relief), decisive China stimulus, credible US‑EU trade truce.

Bad: Iran-linked oil shock, abrupt tech de‑rating, US-China export‑control escalation, visible Fed independence erosion.

CH: Taiwan tensions, reversal of US trade policy, US shutdown, mass protests in the US against the Trump administration.

My hope is that Trump's heavy-handed, unconventional approach yields positive outcomes. My concern is that it emboldens other actors to take similar unconventional actions, such as China.

SA specific questions:

What does all the above imply for the South African economy and local markets? Do we still need commodity prices to do well in 2026, or can 'SA Inc' carry the baton?

OM: Commodity cycles tend to lead the economic cycle in South Africa. We saw this between 2002 and 2008. SA Inc would benefit from better growth and employment numbers.

BS: In theory, SA Inc should be benefiting from both improving fundamentals and government reforms, but for now the precious metals momentum trade is taking all the oxygen out of the room. At some point this will turn. More corporates are recognising the opportunities in the informal economy, which has been ignored for years. We have all the right ingredients, all that is lacking is confidence. South Africans are well-conditioned cynics, and we all need some of what Adrian Gore recently referred to as 'sophisticated optimism'. It's easy and instinctive to be risk-averse, but there are abundant opportunities for those who invest in our economy.

AB: There are some key tailwinds: a benign global backdrop, weaker oil price, strong precious metals, softer US dollar. This leads to a narrower current account deficit (0.3% to 0.5% of GDP), a firmer rand (averaging about R15.80 to the dollar), a CPI of 3.1% to 3.3%, and two interest rate cuts in 2026. Growth will be about 1.5% (still driven by cyclical, not structural, factors). Commodities will help the terms of trade and revenues, but 'SA Inc' can contribute if energy/logistics reforms continue and private capex edges up.

CH: There is a strong structural reform story in South Africa, which has probably got legs. So even if commodities are flat, GDP growth could be well over 2%.

BK: We have had a huge boost from precious metals and exports. We are hoping for more of the same, with stronger growth to follow, amid low inflation and lower interest rates. The follow-through to faster domestic spending is still to come, though some recent signs – credit supply growth and retail and motor vehicle sales – are already positive.

Markets now seem broadly comfortable with the Government of National Unity (GNU), thanks to improvements on the electricity front and transport, as well as an improved macroeconomic situation. Do you expect this to continue in 2026?

AB: Base case: GNU holds, but noise rises going into municipal polls. Service delivery failures in metros (Johannesburg, Tshwane) will continue to remain a drag. Greater private-sector participation in electricity/water distribution is likely part of the solution. Political volatility will also be elevated, but confidence will be aided by reform progress (think Operation Vulindlela) and a consultative budget process.

CH: There is some risk to the GNU this year. Municipal elections will likely strain relations among the GNU parties, a key risk for markets.

OM: There appears to be broad-based buy-in into President Cyril Ramaphosa's structural reform programme, both from his coalition partners and from within his own party (the ANC). It is a key lever for improving on SA's growth outcomes and increasing employment. All parties in the GNU are tied to its concept and success; therefore, they have a vested interest in improved economic fundamentals to influence their electoral outcomes at this year's local government elections and the 2029 national elections.

BS: South Africa, like most countries, has had its ups and downs in terms of development and political risk. I think we are on an upward, improving trajectory. There will be bumps in the road, but I think we are very attractively priced given the risk and opportunity.

BK: Yes. A big positive is the presence of more competent ministers and a degree of check on the statist ambitions of the ANC.

Dysfunctional municipalities and poor service delivery continue to be a negative for the SA economy. How do you see this playing out in 2026, in the light of local level elections towards the end of the year?

CH: No party can now expect a majority in the major metros (except maybe the DA in Cape Town). That implies greater competition for votes and hopefully improved service delivery.

BS: This remains a structural drag. Some improvement is likely, but it will be uneven. Private-sector solutions (ie, opportunities) will increasingly substitute for weak local government.

How will international relations (e.g., tariffs or other targeted action by the Trump regime) shape SA's position in 2026?

OM: It will likely continue to be noisy into 2026. There appears to have been a negligible impact on South African economic outcomes so far, with growth for 2025 expected to outpace 2024. However, the US remains a key ally and customer for South Africa, and we must tread carefully to ensure that US actions in response to our own economic and foreign policy do not destabilise our current growth momentum.

AB: The risk of exclusion from AGOA remains elevated and the broader US tariff regime will be a headwind for the automobile and agricultural sectors if it's mistargeted. South Africa's diplomatic bandwidth (think of the vacant ambassador post to Washington in 2025) has been thin, and repositioning vis-à-vis the US/China/EU/India remains fluid. Portfolio impact runs mainly through the rand, country risk premia and export volumes.

CH: I suspect South Africa will try to keep its head down. Let the US, Europe and China fight it out without trying to annoy any of them.

NU: It can only get better! Seriously, we need to do better than this. We must remain strong, but we need to professionalise what we do and hopefully, the government moves away from the historical narrative and does better.

BS: SA walks a careful (somewhat risky) line. Targeted US action is a risk, but pragmatism on both sides should limit fallout. Diversification of trade partners continues.

What other factors are likely to shape South African markets in 2026?

BS: Following on from the previous question, we must be more careful about our 'friends' and focus on being a neutral, corruption-free, democratic country that emphasises growth and business friendliness. Investment will lead to job creation and job creation will reduce inequality.

CH: Rating upgrades as the SA fiscal position turns.