/ MEDIA STATEMENT / This content material isn’t written by Creamer Media, however is a provided media assertion.

South Africa stays the third largest African financial system, behind Nigeria and Egypt, and probably the most superior and diverse financial system throughout the continent. In 2021, South Africa’s GDP was value about $420 billion.

The 2021 annual GDP development price was 4.9% and the primary two quarters of this yr have continued the optimistic pattern, with client companies, manufacturing, commerce and agriculture being the principle sources of development. An enlargement in client spending on services and products boosted the demand facet of the financial system, however the largest share of development got here from exports and family consumption alongside. As a sector, manufacturing, already the nation’s largest sector was the perfect performing. Moreover, smaller suppliers of companies are diversifying and exhibiting optimistic outcomes.

No matter these optimistic indicators, nevertheless, final yr’s civil dysfunction and harsher lockdown restrictions had a extreme affect on the financial system in Q3, to such a level that actual GDP has not but regained the extent registered in Q2 2021, earlier than the occasions. Moreover, South Africa’s employment has taken one other definitive step downwards, which is more likely to additional native demand in the long term.

Furthermore, actual GDP stays subdued in comparison with pre-pandemic ranges, leading to financial exercise on the identical degree as in Q3 2017. General, the financial system is 1.8% smaller than in Q1 2020 and will likely be additional impacted by inflation of round 7% and the flooding that occurred in KZN throughout Q2.

On a optimistic notice, South Africa’s exports confirmed outstanding outcomes over the last yr, with a rise of 8.5% within the fourth quarter of 2021, pushed primarily by valuable metals and stones (gold, platinum, diamonds), base metals and motor autos, elements and equipment. Imports have additionally steadily elevated, particularly within the fields of chemical and mineral merchandise in addition to iron and metal.

South Africa has sustained a optimistic steadiness of commerce for greater than two years, a feat not beforehand achieved since 1994. Moreover, South Africa achieved a optimistic commerce steadiness with the EU for the primary time, its steadiness of funds turning from a commerce deficit (- R22 bn) with the EU in 2020 to a commerce surplus (R17 bn) in 2021. The EU stays South Africa’s largest buying and selling associate, accounting for 22% of whole commerce.

Moreover, South Africa’s exports to the EU are extra diversified than to different companions in SADC. The mixed exports of autos and transport tools, equipment, chemical substances, agri-food, and plastics accounted for nearly 60% of its export basket in the direction of the EU.

SOUTH AFRICA’S SLOW WAY TO RECOVERY

Development, which reached 4.9% in 2021, is predicted to sluggish to 1.9% in 2022 and 1.6% in 2023. Social unrest in July 2021 arrested a doubtlessly stronger enterprise restoration, however GDP development was nonetheless sturdy in 2021. Family consumption is bolstered by authorities

subsidies and decreased financial savings. Each the excessive demand for uncooked supplies and the resultant increased fetching costs are set to stimulate exports and authorities incomes as much as mid-2022 .
As corporations roll over their asset inventory, funding is projected to broaden from 2022 onwards and monetary coverage is predicted to be tight all through the forecast interval (though unanticipated revenue from the uncooked supplies growth is supporting the federal government’s funding of the pandemic restoration).

Elementary to stimulating future development are investments within the electrical energy manufacturing, infrastructure, and superior training. Inflation, albeit on the rise, appears underneath management through excessive rates of interest which is meant to depress demand. This financial strategy is more likely to solely maintain over the quick time period on condition that development is sure to ease from subsequent yr onwards.

THE MOST RESILIENT SECTORS IN 2022

After a harsh 2020, that witnessed a 6.4% contraction of the financial system, enterprise exercise rose by 4.9% in 2021. Mining, agriculture and manufacturing recorded the best development charges in 2021 – with finance, private companies and manufacturing the most important optimistic contributors to general development – whereas the development business contracted in 2021, falling by 1,9% (the fifth consecutive yr of decline in development).

Beneath we report a snapshot of the foremost industries in SA in 2021.

Mining

The mining sector has rebounded to pre-pandemic ranges, boosted by increased general costs and sturdy demand. Certainly, mining output rose by 25.2% throughout the first a part of 2021, as in comparison with the identical interval in 2020. Nonetheless, the business stays hampered by a number of components corresponding to transport, vitality, logistical bottlenecks, and legislative unpredictability.

Manufacturing

Though manufacturing output has not but reached pre-pandemic charges, it nonetheless surged by 17% within the first half of 2021, in relation to the identical interval in 2020. The rise in manufacturing output was primarily pushed by the manufacturing of petroleum, chemical & plastic merchandise and meals & drinks. Manufacturing confidence started dipping in June 2022 (in response to vitality shortages) after a yr of buoyancy. Different constraining quick to medium-term manufacturing embrace uncooked materials shortage and surging productions prices.

Electrical energy

Though the electrical energy, water and gasoline business noticed a 5.8% enlargement within the first six months of 2021 in comparison with the earlier yr, quite a lot of vital points stay (see Vitality Sector Focus). Eskom’s dwindling plant efficiency is a part of the reason for frequent energy outages which have an effect on your complete financial system. Energy interruptions and inadequate electrical energy provision characterize subsequently a limitation to short-term financial upturn.

Transport and communications

The transport and communications sector expanded by 4.2% (see Logistics and Transport Sector Focus) within the first semester of the 2021 in comparison with the primary half of 2020 as a result of surge in cargo transport and the enlargement of passenger motion on the transport facet

and the rise in demand for digital amenities on the communications facet. Extended outages and extra lockdowns pose a menace to development.

Commerce
Commerce exercise elevated by 2,9% as lockdown restrictions eased, with optimistic outcomes from retail, motor commerce, vacationer lodging, and eating places, fast-food and catering. Financial exercise within the wholesale sector, nevertheless, edged barely decrease.

Finance and enterprise companies

The finance sector additionally skilled 4.7% development within the first a part of 2021 in comparison with the identical interval in 2020. Financial institution purchasers and the establishments’ stability have been upheld by sturdy responses of financial, fiscal and regulatory coverage. The life and non-life insurance coverage industries stay effectively capitalized however the big variety of claims paid as a result of COVID-19 pandemic, and they can help their policyholders and beneficiaries.

ITALY ECONOMIC OUTLOOK 2022

Italy’s GDP expanded by 1 % quarter-on-quarter within the three months between March and June of 2022. It was the sixth consecutive interval of enlargement and probably the most fast one for the reason that third quarter of 2021. Moreover employment at its highest for the reason that Nineteen Eighties and unemployment at its lowest since 2006.

The enlargement alerts a subsiding of the downturn from the pandemic, because the second quarter of 2022 exceeded the common GDP of 2019. The federal government forecasts a 3.1 % in development for the Italian financial system in 2022, revised down from the 4.7 % estimate amid a extremely unsure macroeconomic backdrop, together with elevated inflation (8%) and the Ukrainian Struggle.

Fears abound that there will likely be rationing of vitality within the winter, as Italy is the 2nd most reliant nation on Russian gasoline, after Germany. One other supply of uncertainty is political, with the chance {that a} new authorities will lack the power and political will to realize targets set out by the EU. Owing to those uncertainties Moody’s just lately downgraded its outlook for Italy in 2023.

ITALIAN – EXPORT MARKET TO SOUTH AFRICA

Within the African context, South Africa is a key participant as it’s the most superior and diversified financial system on the continent and is each a market of nice curiosity and a necessary gateway to markets within the area resulting from its good infrastructure community and powerful monetary establishments.

In recent times, there was a constant development of Italian exports to South Africa in addition to an rising presence of main Italian industrial corporations within the nation. Main the listing of probably the most exported Italian merchandise to South Africa are these deriving from oil refining, with a worth of €248.9 million, instantly adopted by jewelry and valuable stones. The third place is taken by equipment, together with each basic and particular function equipment.

SOUTH AFRICAN – EXPORT MARKET TO ITALY

South Africa’s financial system remains to be largely reliant on the export of main and intermediate commodities to industrialized international locations. The entire worth of products exported to Italy from South Africa amounted to €1 billion in 2021, rising by 42% from 2020.

Nearly all of South African exports to Italy come from the category of iron and metal with ferro alloy and stainless-steel merchandise being high of the listing, making up over 25% of whole exports to Italy throughout 2021, with a rise of over 74% from 2020.

That is adopted by the class “Ores, slag and ash”, making up 14,6% of the exports to Italy. Regardless of the heavier-than-normal rainfall that hampered the minerals sector, the worth of those exports to Italy greater than quadrupled from 2020 to 2021.

Nickel and articles thereof come on the third place, sustaining a steady 8% share within the exports to Italy. Seafood accounts for the fourth most exported class of products to Italy from South Africa, with a worth of €74.5 million in 2021.

FDI INFLOW TO SOUTH AFRICA

Overseas Direct Funding in South Africa narrowed sharply to ZAR 22.7 bn within the fourth quarter of 2021 from ZAR 557.9 billion within the earlier quarter. South Africa recorded international direct funding inflows of ZAR 604.3 bn ($ 41.15 bn) in 2021, an enormous bounce from inflows of ZAR 50.4 bn in 2020, primarily influenced by know-how investor Prosus buying about 45% of its South African father or mother Naspers.

Historically, the European international locations are energetic buyers in South Africa (Italy, United Kingdom, Netherlands, Belgium, Germany, and Luxembourg), in addition to america, Japan, China, and Australia. A lot of the funding is directed to the monetary, mining, manufacturing, transportation, and retail sectors.

The beneath graphs show first the presence in South Africa of Italian corporations and subsidiary corporations (these with father or mother corporations in Italy) and secondly the broad Italian presence of various varieties in South Africa. It’s distinctive information collected and labeled by the Italian South African Chamber of Commerce and Industries.

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