This is according to Transnet in their latest communique (Editor: Could it be as a result of the ‘go-slow’ experienced at all ports?):
Despite a moderate rebound in the second quarter of 2019, the South African economy remains fragile and vulnerable to both local and international uncertainties. Although South Africa is regarded as the most industrialised country on the continent, its economy over recent years remains one of the slowest growing in Sub-Saharan Africa and the SADC region. A fair share of the country’s economic struggles are attributed to policy uncertainties for key sectors and prolonged energy supply challenges.
The outlook looks uncertain in the short to medium term with annual growth remaining at less than 2 per cent. With global economic growth, including some key economies, revised downward recently, the South African economy is likely to be affected further through its trade contribution into real gross domestic product (GDP). To reverse the current economic misfortunes, government has proposed a number of macro and microeconomic areas as part of economic reforms, with the logistics value chain set to play a significant role in the country’s growth and development.
Domestic economic growth struggles have negatively affected production in a number of key sectors such as mining and agriculture. Despite the mining sector recording the strongest recovery with double digit growth in the second quarter, the current power outages are likely to erode this. Prolonged unfavorable weather conditions in most parts of the country are likely to cause contraction in agricultural production for the second successive year. These and other negative economic factors are likely to affect targeted volumes of commodities passing through our ports.
Business confidence has been at its lowest levels since the beginning of the year, despite improvements seen in some key microeconomic indicators such as the consumer price index (CPI), repo rate and R/$ exchange rate seen in the third quarter of 2019.
During the first half of 2019/20, two of the five main commodity categories gained positive growth compared to the corresponding period in the previous financial year. A significant increase in automotive exports has been the main driver for the overall 14.4 per cent growth (y-o-y) recorded in the first six months. Other positive growth was recorded in dry bulk volumes (3.1 per cent, y-o-y) which was also driven by growth in exports.
However, volumes in container, liquid and break bulk struggled to gain positive growth. The negative growth of volumes in container movement could be attributed to poor production in the manufacturing sector, while the decline in liquid bulk has been due to the decline in fuel demand experienced during the first quarter of 2019/20.
As domestic economic growth is expected to remain struggling with a forecast of only 0.7 per cent in 2019, some commodity volumes are unlikely to recover fully over the remaining half of the financial year.
However, we remain optimistic for a recovery in container movement, while automotive and dry bulk are expected to maintain positive growth, but at a slower pace.
Alan Straton
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