Coffee Table Economics (CTE) with Anchor, by Casey Sprake, is distributed periodically. CTE is a compilation of Casey’s research, analysis, and perspectives on key South African (SA) and global economic data such as inflation, spending trends, and international market dynamics, including socio-political events and the multiple factors shaping the world economy.
Executive summary
In this week’s edition, we highlight the following:
- Export dependency in a fracturing global economy. As 2025 unfolds, global trade faces renewed uncertainty. US President Donald Trump’s reintroduction of aggressive tariffs in April—briefly paused for 90 days—has shaken an already fragile system. While some countries received temporary relief, the broader signal is clear: The era of frictionless globalisation is under threat, with significant implications for export-dependent economies.
- The poverty paradox: Hidden realities of global inequality. GDP per capita is a key indicator of a country’s economic well-being, offering a more accurate comparison across nations by measuring output per person rather than total size. While it does not reflect inequality or quality of life directly, it provides insight into individual productivity and national development. The vast disparities in GDP/capita expose deeper issues—such as limited opportunity, weak infrastructure, and fragile institutions—underscoring the crucial need for inclusive, people-centred development strategies that prioritise social responsibility and equality, and go beyond headline growth.
- SA’s May inflation holds steady, but risks loom on the horizon. SA’s headline consumer inflation (CPI) for May held steady at 2.8% YoY, matching the April figure. While falling fuel prices continued to put downward pressure on the overall number, this was offset by an uptick in food inflation and a stable reading for core inflation.
Export dependency in a fracturing global economy
As 2025 unfolds, global trade finds itself at a crossroads. The re-imposition of aggressive reciprocal tariffs by Trump in April, followed by a 90-day pause announced on 9 April, has introduced fresh uncertainty into an already fragile system. While some nations have been granted temporary relief, the broader message is clear: The era of seamless globalisation is under threat. For countries whose economies are heavily export-oriented, this uncertainty carries outsized consequences.
According to recent data from the United Nations Comtrade Database, exports continue to play a critical role in the economic performance of many countries. The ratio of goods exports to GDP provides a revealing lens into just how integrated (and dependent) some nations are on global markets. Take South Korea, for example: In 2023, exports accounted for 37% of its nominal GDP. As a worldwide hub for semiconductors, automobiles, and petrochemicals, South Korea’s prosperity hinges on unimpeded access to international buyers, particularly in the US, China, and the EU. In this context, the imposition of tariffs or restrictions can have ripple effects across entire sectors of the Korean economy. Mexico stands out in the Americas with a 33% export-to-GDP ratio, reflecting its deep trade integration with the US. Roughly 80% of Mexican exports head north across the border, making it extremely sensitive to changes in US trade policy. Canada (export dependency of 19%) faces similar risks, though it has somewhat more diversified trading relationships.
Perhaps paradoxically, China (as the world’s manufacturing powerhouse) also shows a moderate export-to-GDP ratio of around 19%. Conversely, the scale of China’s exports paints a different picture – in 2023, the US alone made up c. US$436bn, or 13%, of China’s total export value. Conversely, the scale of China’s exports paints a more nuanced picture – in 2023, the US alone made up nearly US$436bn, or 13%, of China’s total export value. This tightly intertwined relationship has made the current round of tariff escalation particularly disruptive.
In contrast, the US (despite being the second-largest exporter of goods globally) has the lowest export dependency among major economies. With exports comprising less than 10% of GDP, the US economy is driven overwhelmingly by domestic consumption. This gives Washington greater leeway in pursuing protectionist policies without immediately harming its broader economic engine, though such moves inevitably provoke retaliation. This dynamic imbalance creates asymmetry in global trade diplomacy. The more export-reliant a country is, the more constrained it is in responding to rising protectionism. For China, South Korea, or Germany (with exports at nearly 40% of GDP), retaliatory tariffs can easily hurt their domestic economies.
The escalation of tariffs marks a clear departure from decades of liberalised trade. Financial markets, already jittery, have reacted sharply. Supply chains are being re-evaluated, foreign investment is being redirected, and manufacturing strategies are being reshaped. As protectionist sentiment grows, countries with high export-to-GDP ratios will be forced to adapt. Some may seek to diversify export markets through new bilateral agreements or regional trade blocs. Others may attempt to shift toward more domestically driven growth models, though such transitions are often slow and politically challenging.
The bottom line
What lies ahead for the global trading system in 2025 remains uncertain, but one trend is unmistakable: economies are beginning to reprice geopolitical risk into their trade strategies. Export-dependent nations will need to build resilience through diversification – not just of trade partners, but also of supply chains, production bases, and domestic consumption capacity. The interconnectedness that once underpinned global growth is becoming a vulnerability in an era of strategic competition. How countries respond will define not only their trajectories but also the shape of the global economy in the years to come.
The poverty paradox: Hidden realities of global inequality
GDP/capita is a widely used and insightful metric for gauging the economic well-being of a country’s population. Unlike raw GDP data, which can be skewed by the sheer size of an economy, GDP/capita levels the playing field by dividing total economic output by the number of people. This allows for more meaningful comparisons across countries of different sizes and stages of development, by focusing on the average economic value generated per person, GDP/capita serves as a proxy for individual productivity and living standards. While it does not capture inequality within countries or the quality of life directly, it offers a valuable snapshot of how effectively an economy is converting its resources and labour into measurable wealth. Most importantly, it helps expose the often-stark disparities in economic opportunity and prosperity between nations, drawing attention to the structural and developmental gaps that persist across the global landscape.
In 2025, the global distribution of income remains sharply uneven. South Sudan ranks as the world’s poorest country, with a GDP/capita of just US$251. At the other end of the list, India (despite being one of the world’s five largest economies) also features among the 50 poorest, with a per capita figure of US$2,878. This juxtaposition highlights how large populations can dilute per capita metrics, masking the broader scale of an economy. Nigeria offers a similar example: while its economy is among Africa’s largest, its GDP/capita remains low at US$807, reflecting persistent development challenges. The disparity between the very poorest and even moderately poor countries is striking. South Sudan’s per capita output is less than one-eleventh that of India, underscoring how extreme poverty can persist even within a world of growing aggregate wealth.
Several Pacific Island nations also appear among the poorest economies, including the Solomon Islands and Kiribati. These small, remote countries face unique structural constraints, including limited natural resources, geographical isolation, and narrow economic bases. Interestingly, this contrasts with wealthier island nations, particularly in the Caribbean, which often benefit from legacy advantages such as robust legal and financial institutions inherited through historic colonial ties. Geographically, the lowest GDP/capita figures are concentrated in Sub-Saharan Africa (SSA), with some representation from South Asia and the Pacific. Many of these countries continue to grapple with entrenched challenges such as fragile institutions, conflict, poor infrastructure, and low industrialisation. These structural weaknesses hold back income growth and limit the ability of these economies to participate fully in global markets. Africa’s economic marginalisation is particularly stark. Despite accounting for 19% of the world’s population, the continent contributes just 3% to global GDP. This imbalance reflects both historical legacies and ongoing systemic barriers. Without targeted efforts to build resilience, attract investment, and foster inclusive development, this gap is likely to persist, undermining global economic equity and stability in the long run.
The bottom line
Understanding these dynamics is crucial — not just for economists and policymakers, but for anyone concerned with building a more inclusive and sustainable global economy. The stark disparities in GDP/capita reveal more than just numbers; they reflect lived realities of limited opportunity, inadequate infrastructure, and fragile institutions that millions contend with daily. These patterns highlight the urgency of development efforts that go beyond headline growth figures, focusing instead on improving human capital, resilience, and economic access.
SA’s May inflation holds steady, but risks loom on the horizon
SA’s headline consumer inflation for May held steady at 2.8% YoY, matching the April figure. While falling fuel prices continued to put downward pressure on the overall number, this was offset by an uptick in food inflation and a stable reading for core inflation. On a monthly basis, CPI eased to 0.1% in May from 0.2% in April, pointing to some short-term cooling. Looking deeper under the ‘hood’ of the headline rate, inflation trends continue to soften. The 3-month annualised inflation rate slowed to 0.3%, down from 0.5%, while the 6-month rate decelerated from 2.9% to 1.9%. These data reinforce the view that demand-driven price pressures remain muted. Core CPI (which excludes volatile components like food and energy to give a clearer sense of underlying inflation) held steady at 3.0% YoY. Some categories continue to experience significant price declines. Durable goods, particularly furnishings and household equipment, remain deep in deflation, with falling prices reported for over 17 months in a row. Transport services, including private operators, also stayed on a deflationary path for a ninth consecutive month.
That being said, food inflation has become a growing concern. The food and non-alcoholic beverages (FNAB) category was the only major component to contribute positively to monthly CPI, rising by 1.1% MoM and accelerating to 4.8% YoY – the highest rate since March. This was primarily driven by a surge in meat prices, especially beef, where inflation jumped from 3.0% to 4.4%. The increase likely reflects the delayed impact of supply-side shocks, including a major foot-and-mouth outbreak and higher feed costs. Fruit and vegetable prices also posted double-digit YoY increases, adding further upward pressure to the food basket. On the other hand, fuel inflation provided meaningful relief. Prices declined by 1.1% MoM and fell a substantial 14.9% YoY — the largest annual drop since October 2024. Petrol is now nearly 16% cheaper than it was a year ago, while diesel has declined by 12.6%. This downward trend in fuel costs is expected to continue into June, although it may be short-lived. Rising geopolitical tensions in the Middle East and a weakening rand are already pushing up global oil prices, which could translate into higher domestic fuel prices in the coming months.
For consumers, the inflation picture remains mixed. Lower fuel and core inflation suggest some relief in categories like transport and durable goods. However, rising food prices, which make up a significant and non-discretionary share of household spending, are particularly concerning for lower-income groups and could weigh on real purchasing power if the trend continues. From a policy standpoint, May’s data support the case for a more accommodative stance from the South African Reserve Bank (SARB), reinforcing the view that inflationary pressures remain contained. However, the outlook is far from straightforward. The upcoming SARB Monetary Policy Committee (MPC) meeting in July will coincide with the end of the “Liberation Day” pause on US tariffs, introducing a layer of global uncertainty. In this environment, the MPC is likely to remain cautious, especially given the risk of renewed energy price shocks or trade disruptions.
The bottom line
While inflation remains well below the midpoint of the SARB’s 3%–6% target band, developments on the geopolitical and trade fronts will be critical in shaping the policy outlook. For now, we expect rates to remain on hold in July. However, should trade tensions ease and inflation expectations stay anchored, the door could open to a more dovish bias later in the year.
