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By Ncaba Ntshakala
The Ministry of Economic Planning and Development’s Macroeconomic Analysis and Research Unit has released its 2024 Quarter 1 economic bulletin, highlighting the potential global economic impact of the upcoming 2024 elections in key countries.
This election year is pivotal for the United States, India, the European Union, and South Africa, with significant economic repercussions anticipated.
The United States, as a global superpower, is expected to influence global economic developments significantly.
The presidential campaigns have already signaled potential protectionist policies, with candidates proposing substantial changes to trade policies.
Donald Trump, seeking a second non-consecutive term as a Republican, has proposed aggressive trade measures, including a 60 per cent tariff on all Chinese imports, a 100 per cent tariff on Mexico-made Chinese cars destined for the US market, and a 10 per cent tariff on imports from other countries.
Current President Joe Biden, running for a second consecutive term, has called for a tripling of tariffs on Chinese aluminium and steel imports and plans to work with Mexico to curb China’s tariff evasion tactics.
Regardless of the election outcome, these proposed tariffs are likely to incite further trade wars with China and other countries, potentially hindering global economic growth.
Increased tariffs typically lead to reduced trade volumes, disrupted supply chains, and higher business costs, which are often passed on to consumers, thereby fueling inflation.
The proposed 10 per cent tariff on imports from other countries could also jeopardize the Africa Growth Opportunity Act (AGOA), under which Eswatini benefits.
Additionally, trade war-induced uncertainties could deter investment both domestically and internationally, further dampening economic prospects.
The bulletin warns of the risk of geo-economic fragmentation, wherein the global trading system may splinter into trade blocs centred around dominant nations.
This scenario would likely lead to increased reliance on preferential trade agreements (PTAs) within regional blocs, while interregional trade could become more unpredictable and unstable due to the absence of stringent multilateral rules.
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According to TechUK, the trade risks associated with the 2024 elections are significant. The predicted trend towards nationalist policies is expected to hinder global trade through the introduction of tariff increases, potentially leading to inflation and a slowdown in export growth.
However, these policies might also stimulate domestic industries, creating a complex dynamic for investors to navigate.
The India, Mexico, Europe, the United States, South Africa and the United Kingdom each carry their own trade implications; from isolated countries to the renegotiation of the United States-Mexico-Canada Agreement (USMCA) under the next US presidency in 2026.
India’s subsidy-focused approach to reducing trade barriers is expected to boost manufacturing in advanced industries and attract foreign manufacturers into the country, which aims to become a global electronics supply chain hub.
Its trade negotiations with the UK, EU, and Australia could further integrate India into the global economy.
Speaking to an economist, he shared insights on how such can impact Eswatini. The economist has highlighted that the upcoming 2024 elections in major economies, particularly the United States, India, the European Union, and South Africa, could have significant repercussions for Eswatini’s economy.
“With the US election potentially triggering protectionist trade policies, including increased tariffs on Chinese imports, Eswatini could face indirect impacts through disruptions in global trade.” Stated the economist.
“Such policies may lead to trade wars, increased costs for imported goods, and higher inflation.”
Moreover, the economist added that the uncertainty induced by these trade conflicts could deter investment, which may affect Eswatini’s economic growth.
The economist emphasized that Eswatini’s reliance on trade agreements, such as the Africa Growth Opportunity Act (AGOA), means that shifts in global trade dynamics could have a profound effect on the nation’s economic stability and growth prospects.
