Agriculture, mining exports boost economy

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South Africa’s bulk export volumes surged by 34.5% year-on-year (y/y) in July to 15.6 million tonnes according to Transnet National Ports Authority (TNPA). This brought the increase for the first seven months to 8.7% y/y, showing that mining and agricultural bulk exports are boosting the South African economy.

The data shows that the primary sector that is agriculture and mining will be boosting the South African economy this year. In the first quarter these two sectors were the only ones out of the ten major economic sectors that contributed to the quarterly change in the first quarter.

Their contribution is expected to continue in the remainder of the year as harvesting of the summer crops only started in May and should last until August. The Agricultural Business Chamber (agbiz) has forecast maize exports of some 3 million tonnes this year after none last year. This should lead to 20% plus increase in bulk exports from other ports apart from Saldanha and Richards Bay.

Policy uncertainty and logistics constraints meant that South Africa lost out on the 2003 to 2008 commodity price boom with annual bulk exports increasing by a mere 2.8 million tonnes between those two years. Since then there has been a marked turnaround due to better policy co-ordination between mining companies and state-owned Transnet, so that volumes have improved by 45% or 52.3 million tonnes between 2008 and 2015. Low commodity prices in 2016 however constrained supply and there was a 2.8% drop in 2016 to 163.3 million tonnes.

A jump in commodity prices since Donald Trump’s election in November 2016 on his campaign promise of a hefty boost to American infrastructure spending may result in a double-digit boost in bulk exports in 2017. In the first quarter of 2017, bulk export volumes grew by 11.7% y/y. The record annual increase in this century was 9.0% set in 2010.

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