🔒 Load shedding, the strike at Transnet, and oil price increases will have a dramatic effect on South Africa’s economic prospects soon.📈👎 economy
Load shedding, the strike at Transnet, and oil price increases will have a dramatic effect on South Africa’s economic prospects soon, and the country’s external trade dynamics will be especially hard-hit, while the strike can also affect coal supply to power stations, potentially leading to worse bouts of load shedding.
While a protracted Transnet strike would hurt exports, thermal coal miner Thungela Resources said it would negatively impact its production if the strike continues for longer than two weeks. The BER says the strike is adding to the constraints on the country’s export abilities, with Transnet’s major bulk commodity export rail lines operating well below capacity for some time.
In addition, the Transnet strike increases the risk of intensified load shedding as it could undermine coal deliveries to power stations that receive coal via rail, while agricultural exports are also set to be badly hurt by a strike. According to the BER, the aggressive stance by OPEC+ also reflects a tighter bond between oil giants Russia and Saudi Arabia, with the cartel arguing that the production cut is necessary to prevent a collapse in the oil price similar to 2008 amid slower global growth.
The S&P global SA PMI, which tracks activity across the private sector in the economy, also saw its headline index decline to 49.2 in September from 51.7 in August. This was the first contraction since December 2021 and was also linked to load shedding hurting output and demand.The only bright note was new vehicle sales that showed a 10.8% increase in September compared to September 2021. The BER says this solid performance was mainly due to robust passenger car sales, which rose by 9.
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