After showing signs of recovery in Q1 that saw the economy limping back to pre-Covid levels, economic growth slowed significantly in the second quarter with the additional burden of raging inflation.
The Mining sector has been one of the pillars of the South African economy translating high metal prices into record earnings and tax windfall. It contributed to the current account surplus and also kept the rand afloat during the Pandemic. However the party seems to be over.
South Africa’s economic woes further deepened after the latest mining and manufacturing data showed that production in the mining sector, and its contribution to gross domestic product (GDP), has been going down. According to Statistics South Africa (Stats SA) mining production fell by almost 15% in April on a year-on-year basis, and by 4.3% compared with the previous months
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Gold production fell by 27.8% year on year, production of platinum group metals declined by 22.6% and coal output slumped by 14.7%. strike at Sibanye-Stillwater’s gold operations,logistical issues such as Transnet’s ongoing issues as well as power shortages are some of the reasons cited for the poor performance. Economic experts observe that though the country had the potential to benefit from this year’s surge in commodity prices several challenges prevented it from reaping the benefits.The manufacturing sector was impacted due to KZN floods. The production fell by 7.8% in April 2022 compared with April 2021, and by 5.4% on a monthly basis. To conclude, after showing signs of recovery in Q1 that saw the economy limping back to pre-Covid levels, economic growth slowed significantly in the second quarter with the additional burden of raging inflation.
