South Africa’s neutral stance on the Russia-Ukraine war might cost the country a major portion of its GDP if the United States and the European Union decide to penalize Pretoria, Bloomberg said on Friday, citing a Johannesburg-based partner of American banking and services conglomerate JPMorgan.
South Africa may lose up to $32.4 billion in export earnings, or over 10% of its GDP, if the West takes action, according to Bloomberg, citing a note from Ndivhuho Netshitenzhe, an economist at Stanlib Asset Management.
Western governments have attempted to penalize countries that deal with Russia in order to allow it to avoid sanctions. The EU is presently debating the 11th package of measures aimed at third-party countries. However, according to media sources, the EU’s ambassadors have yet to reach an agreement on any sanctions.
China is South Africa’s major trading partner, followed by the United States and Germany. According to Bloomberg, the EU and US account for 30.4% of South Africa’s total exports, while Russia accounts for only 0.23%. Moscow mostly purchases manganese ore, citrus, and automobiles from Pretoria, while the United States and Germany purchase platinum, automobiles, and gold.
Pretoria has stated on numerous occasions that it is neutral in the dispute between Moscow and Kiev. The African country is also a part of the BRICS (Brazil, Russia, India, and China) coalition of developing economies.
South Africa will host this year’s BRICS summit in August, which will be attended by leaders from all member countries. Pretoria has stated that it will not enforce the International Criminal Court’s March order for the arrest of Russian President Vladimir Putin.
BRICS has already surpassed the G7 (the group of seven industrialized nations comprised of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States) in terms of economic growth, accounting for more than 30% of world GDP. In light of Western economic sanctions targeting Russia, which have seen billions of dollars in Moscow’s assets blocked abroad, BRICS member states have been pressing for de-dollarization. Saudi Arabia, Indonesia, the United Arab Emirates, and Thailand are among the countries considering joining BRICS.
