The Real Economy Bulletin - Third Quarter 2015

the real economy bulletin

The Real Economy Bulletin - Third Quarter 2015: pdf

Growth in the GDP and employment: In the past quarter manufacturing showed a significant recovery, although both mining and agriculture contracted. Read more

Trends in trade: In US dollar terms, exports declined in the past year, but rapid depreciation means they have generally increased in rand terms. Within manufacturing, the past quarter saw higher exports from wood and paper and to a lesser extent from auto, but chemicals exports dropped sharply. Imports declined in both dollar and rand terms over the year to the third quarter of 2015. Read more

Profitability and investment: In the second quarter of 2015 — the latest available — mining as a whole made a loss, but construction saw a higher return on capital. Investment trended down in mining compared to 2014, but increased in manufacturing. Read more

What's behind the trends? Slower growth in the real economy mostly resulted from the end of the commodity boom, with a sharp downturn in mining and metals refineries. Still, within manufacturing, electrical equipment and most consumer goods industries have done well in the past six months, essentially due to the national build programme, the more competitive exchange rate, and the end of loadshedding. Agriculture and agro-processing have, however, been slowed by the drought. Read more

Electricity and the carbon tax: Lower production by the main metals refineries means loadshedding has ended, although breakdowns at municipal level still cause unpredictable blackouts. The National Treasury's proposed carbon tax aims ultimately to make coal and oil more expensive fuels. Although it is being initially introduced at a low rate, to achieve the desired outcome would require a fundamental shift in the structure of manufacturing. Read more

Manufacturing Competitiveness Enhancement Programme in context: The recent freeze on applications to the dti’s MMCEP stirred controversy. The short-term decision to end applications essentially reflects increasing efficiency in the dti approval processes. In the medium term, however, Treasury's current efforts to reduce state spending seem likely to bring to a halt the past decade’s rapid growth in the resources available for the incentive. Read more