South Africa’s trade surplus declined for the third consecutive term to R61.4 billion in the first quarter of 2022, representing the lowest trade surplus since mineral prices began to rise in 2020 largely as the result of the COVID-19 pandemic. Imports, which declined to their lowest level since the early 2000s, have continued their upward trajectory, from R266 billion in the second quarter of 2020 (at the peak of the COVID-related lockdown) to about R397 billion in the first quarter of 2022. This is higher than pre-pandemic levels, exceeded only by the R401 billion reported in the third quarter of 2013. Moreover, this represents 20% growth compared to the first quarter of 2021. Exports remain at historic levels, although they declined from R475 billion in the fourth quarter of 2021 to R458 billion in the first quarter of 2022. In contrast to imports, which show significant year-on-year growth, exports increased by just 6% in the year to the first quarter of 2022. Still, the R458 billion represents the highest reported first quarter exports (in constant 2022 Rand) reported by South Africa thus far. 

Updated October 2022

Petrol stations are an important part of South Africa’s fossil fuel-powered economy, providing liquid fuels for more than 12 million cars, delivering fuels to power heavy machinery for industrial and agricultural use, and employing more than 140 000 people across the country. This policy brief aims to understand petrol stations in South Africa, and in particular the people who work there. With the transition to a low-emissions economy underway, these workers are vulnerable to job losses due to the shift to electric vehicles. As such, it is important to understand who these workers are, what skills they have, as well as the resources they possess to chart the least disruptive way forward as part of a just transition. This brief looks at the economics of petrol stations in value addition, contribution to GDP and employment. It provides a profile of the workers, looking at employment, educational attainments, as well as financial resources and access to social networks. It also briefly considers some of the decisions that must be made in the coming years.

Main Bulletin: The Real Economy Bulletin - Second Quarter 2022

In this edition

GDP growth: The GDP shrank by 0.7% in the second quarter of 2022, mostly due to large-scale loadshedding, the floods in May in KwaZulu-Natal, and flat government spending. Value added fell in all of the real economy sectors, with agriculture the hardest hit. Manufacturing contracted by just under 6%. Construction remained depressed, apparently mostly due to stagnant investment by state-owned companies. Tourism continues to lag far behind pre-pandemic levels. Read More

Employment: According to the Quarterly Labour Force Survey (QLFS), in the second quarter of 2022 the formal sector still employed 600 000 fewer people than before the pandemic, or 5.5% less. Informal and agricultural employment, in contrast, were down by only 1%, but there were still more than 10% fewer domestic workers. Manufacturing employment appeared to have stabilised at a lower level than before the pandemic, with employment particularly depressed in metals and food processing compared to 2019. Read More

International trade: South Africa’s surplus in goods trade has continued to narrow as prices for export commodities have declined, with logistics challenges affecting coal and auto, while the cost of petroleum remains comparatively high. Read More

Investment: Private investment has begun to grow again, although public investment remains flat. As a result, the investment rate climbed from 13% in the second quarter of 2021 to 14% a year later. Meanwhile, the average return on assets improved for most of the economy in the year to March 2022. Read More

Foreign direct investment projects: The TIPS Foreign Direct Investment Tracker monitors FDI projects on a quarterly basis, using published investment information. Seven of the 11 projects recorded this quarter reported on the value of the investment, for a total of R10.6 billion. Eight projects that were previously captured in the Tracker have been updated. Read More

Briefing Note: Global commodity prices and the South African economy:  Commodity prices have soared to the highest level in two decades due to supply constraints driven by the COVID-19 pandemic and the war in Ukraine. South Africa's major export prices have risen in tandem.Read the Briefing Note online: Global commodity prices and the South African economy

Briefing Note: Progress on the Sugar Master Plan: It has been almost four years since the relaunch of industrial policy to focus on stand-alone industry master plans. This briefing note tracks the progress of the sugar plan, signed by stakeholders in November 2020, using published information. Read the Briefing Note online: Progress on the Sugar Master Plan

Seutame Maimele is an Economist: Sustainable Growth at Trade and Industrial Policy Strategies (TIPS). His work focuses on global climate change policies and trade, designing climate compatible value chains for carbon-intensive industries for South Africa and Africa. He also works extensively on the just transition in South Africa. He holds a Master's degree in Local Economic Development from the University of Johannesburg. Prior to joining TIPS, Seutame worked at the Western Cape Government (WCG) and for OneWorld Sustainable Investment (OneWorld). At WCG, he supported the drafting of the economic recovery plan for the Western Cape Province post COVID-19, as well as drafting the 2020-2025 economic strategic plan of the Western Cape Government. He was involved in analysing the Quarterly Labour Force Survey for the Western Cape and reviewing Western Cape Municipal Plans and strategies (LED strategies and IDPs). At OneWorld, he supported the delivery of climate change and just transition projects.

The sixteenth edition of APORDE took place in Pretoria (South Africa) in September 2022. The programme included five public seminars, both in person and online, including the Annual Alice Amsden Memorial Lecture. See https://www.aporde.co.za/.

Rethabile Molala joined TIPS in September 2022. Prior to joining TIPS, she was a Junior Research Fellow at the Development Policy Research Unit at the University of Cape Town. Her research interests lie in development economics, international trade, and industrial policy. Rethabile obtained both a Bachelor of Commerce and a Bachelor of Commerce (Honours) in Economics from Rhodes University. She also has a Master's degree in Public Policy and Management from Corvinus University in Budapest, Hungary.

Theft of scrap metal, especially copper cable, imposes costs far beyond the actual value of the material taken. These costs, mostly in the form of disruptions to rail transport and electricity, effectively cut production and foreign sales worth tens of billions of rand a year

Scrap metal is also a critical input for most metals refineries, including both copper fabrication and basic steel. In consequence, illegal exports effectively raise input costs for local producers across these value chains, which are among South Africa’s most advanced. They effectively both incentivise theft and facilitate export-parity pricing for scrap metals, with the resulting rents going to scrap traders instead of boosting local manufacturing.

The Department of Trade, Industry and Competition (the dtic) commissioned TIPS to evaluate the economic and legal effectiveness and viability of measures to limit the theft of scrap metal. This includes an assessment of the economic impacts of the thefts; an investigation of systemic vulnerabilities that enable theft to continue in the scrap metal value chain; a set of proposals to narrow the scope for theft of scrap metal; and a look at international trends in scrap metal production and sale, as well as experiences in regulating it, to help identify ways to address the problem more effectively.

POLICY BRIEF

Waste pickers and the proposed scrap-metal regulations

MEDIA ARTICLES

Government’s new plan to crack down on copper theft in South Africa (BusinessTech 5 August 2022)

Ambitious plan launched to fight copper theft (Sunday World 9 August 2022)

Govt will make it harder to sell scrap metal, not ban trade outright - Patel (Fin24 23 August 2022)