SEIFSA welcomes positive trend in economic GDP growth rate for SA
JOHANNESBURG – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) is encouraged by the latest real Gross Domestic Product (GDP) data released by Statistics South Africa (Stats SA) today, affirming an uptick in economic growth of the domestic economy from the the first quarter of 2021 to 1.2%.
The uptick in GDP is certainly a welcome development, especially given the current economic environment against the backdrop of rising unemployment levels, rising input costs, increasing energy costs and the Covid-19 pandemic. Encouragingly, the agriculture sector and mining showed the best growth rates at 6.2% and 1.9%.
Gross Fixed Capital Formation (GFCF) data released along-side the GDP figures is also supportive of the positive trends we are seeing in GDP and production figures, as GFCF decreased by a marginal 0.9%% in the second quarter of 2021. The increase was attributed to increases in machinery and transport equipment.
SEIFSA Chief Economist Chifipa Mhango, said it is important to note that the Metals and Engineering Industry is heavily reliant in the performance of the Mining, Construction and Building industry and other manufacturing market segments to survive, as these are the key sectoral markets.
“It is evident that during the time when the South African economy had a strong injection of infrastructure projects being implemented in the periods of 2003 to 2010 in the energy sector, as well as projects related in the 2010 World Cup, the Manufacturing Sector, and the Metals and Engineering Sector in specific, also experienced a boom in production and capacity utlisation of over 85%,” he said.
Mr Mhango said it should be encouraging to see a return in demand for the Metals and Engineering industry products in the economy as the South African Government commits to R792.1 billion public infrastructure spending into the next three fiscal years. However, to guarantee stock availability, the industry needs to move back to higher levels of capacity utilization from the current Covid-19 driven levels of 75%.
Another positive element in the StatsSA data release of today is the increase in exports of goods and services of 4.0% in the second quarter of 2020, mainly attributed to increases in mineral products, precious and semi-precious stone sand vehicles” Mr Mhango concluded.