Economists are pencilling in a local economic contraction of up to 1% from April to June. Much of the world is also a mess, with talk of a global recession. Despite all this, the South African economy remains resilient. Here’s why.
The economy is expected to record decent economic growth for 2022: Investec’s Bishop expects growth of 1.9%; Econometrix’s Jammine, Absa and Standard Bank are more optimistic at 2.3%, above the Reserve Bank’s 2% forecast made in July.
On the upside, Jammine expects coal, South Africa’s key export, to be a driver of growth in the coming months. The world has imposed economic sanctions against Russia and is shunning its coal. Europe is facing a daunting energy crisis that is increasing its demand for coal. Global coal prices have tripled over the past couple of years and remain high , benefiting JSE-listed coal producers such as Thungela Resources and Exxaro, which in recent days reported bumper half-year profit increases. This will also benefit South Africa’s tax collections on company profits.The game changer for the economy, says Jammine, will be if the government delivers on its promise to roll out infrastructure projects such as roads, bridges and human settlements.
Solving the power crisis should be the main focus, says Cas Coovadia, the CEO of Business Unity South Africa.
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