By Daniël Minnaar
TRACTOR SALES
Tractor sales, a good measure of market conditions and sentiment in the agricultural sector, started to decline in the first two months of this year. Tractor sales decreased by 16% year-on-year in January and by 2% year-on-year in February.
ECONOMIC GROWTH
According to Statistics South Africa, the economy grew by only 2% in 2022. This is largely due to the impact of load shedding in the fourth quarter of 2022, when the economy contracted by 1,3%. During this quarter, South Africa was subject to stage 6 load shedding for the first time in years.
The economy is smaller now than it was before the Covid-19 pandemic. Real GDP amounted to R1 146 billion – smaller than the R1 148 billion in the first quarter of 2020.
The outlook for GDP growth in 2023 also remains subdued, mainly due to the ongoing load shedding, and is expected to grow by only 1,7%.
This is of concern because material job creation typically only occurs when GDP growth approaches 3% per annum. Thus, the economy is not growing at a high enough rate to significantly promote long-term employment.
EMPLOYMENT
According to Statistics South Africa, the unemployment rate decreased by 0,2 percentage points from 32,9% in the third quarter of 2022 to 32,7% in the fourth quarter of the same year.
In the fourth quarter, 15,9 million people were employed, while 7,8 million people actively looking for work were unemployed.
In the fourth quarter, there were 40,5 million people in the working age group of 15 to 64 years, of whom only 15,9 million were employed. Within the group actively seeking work, 7,8 million were unemployed. A further 16,8 million people in the working age group were classified as discouraged job seekers or not economically active.
TRADE BALANCE
South Africa’s trade balance, the difference between exports and imports in rand value, swung again in the fourth quarter of 2022 towards a negative balance, as imports relative to exports increased.
Since 2019, South Africa has had a positive current account for three years; in other words, more money flowed into the country than flowed out.
In 2021, the current account recorded a surplus of R228 billion, while in 2022 it showed a deficit of R31,8 billion.
The Reserve Bank attributes this to the simultaneous decline in exports due to a weaker local economy and a decline in commodity prices, and the strong rise in imports thanks to trade being almost at the same level where it was before the pandemic.
More particularly, it is the value of imported products and services that has risen and not necessarily the volume. At the same time, the value of exported products has declined.
