News in South Africa 11th April:
1. Global recession on the cards?:
Could the world be headed for another recession?
Just as the global economy is bouncing back from the Covid-19 pandemic, a growing list of risks is clouding the economic outlook – although most economists still believe a recession this year is relatively unlikely.
The war in Ukraine, Russia sanctions, China’s “zero Covid” policies, spiking inflation, and interest hikes by the United States Federal Reserve are all set to crimp growth in 2022.
The question is whether deteriorating conditions and ill-judged policy choices could tip the global economy from a slowdown into a contraction.
“Recessions are incredibly hard to predict, and even good forecasters, e.g. the Fed, only know we’re experiencing a recession once we’re in one, not in advance,” Tara Sinclair, an economics professor at the George Washington University in Washington, DC, told Al Jazeera.
“In general policymakers underweight recessions in their forecasts and focus on predicting the economy in normal times.”
In the US, the Federal Reserve faces the delicate task of cooling inflation, which is at a four-decade high, without raising rates so sharply that it brings on a recession. Historically, the central bank has struggled to pull off such “soft landings” – most economists argue it has only done so once, in 1994, when then-chair Alan Greenspan oversaw a doubling of the benchmark rate without killing economic growth.
A downturn in the world’s largest economy, which recorded its fastest expansion in decades last year, would reverberate globally, threatening to send growth into reverse.
In an op-ed last month, Bill Dudley, the former president of the Federal Reserve Bank of New York, warned that a recession was now “virtually inevitable” as the Federal Reserve had waited too long to tighten policy.
2. Tariff increases for services:
Two of the country’s largest metros are proposing tariff increases for its utilities of around 10%. The City of Ekurhuleni wants to increase the prices of water and sanitation by 11% for the 2022/23 period which begins on July 1. The City of Joburg has proposed increases of 9.75%, very close to 10%, for the same two services.
Municipalities say this is in line with the Eskom tariff increase approved by regulator Nersa at the end of February (Eskom supplies bulk power to municipalities).
Strangely, Nersa published a discussion document on its website at the beginning of this month where it proposes “an average increase of 7.47% in municipal electricity tariffs from July 1”.
The electricity tariff increases need to be approved by the regulator before July.
|Metro city||Property rates||Electricity||Water||Sanitation||Refuse|
|City of Joburg||4.85%||9.61%||9.75%||9.75%||5%|
** For businesses: water 9%, 7.9% for refuse, 9% for sanitation
It must be noted, as the City of Cape Town does in its draft budget, that “the proposed tariff increases … are averages, i.e. some ratepayers and service users may pay more and others less than the average as a result of the impact of rebates, usage/consumption, property value and type of consumer”.
The City of Ekurhuleni says: “Rand Water has indicated a tariff increase of 8.0%. A tariff increase of 11% is proposed to cater for the cost of doing business, such as water reticulation and overhead costs.”
It says it implemented a new valuation roll from July 1 2021 and that “the objection and appeal process is still in progress and will conclude on April 29 2022″.
“In order the shield ratepayers from the impact of the new, it is proposed that the base rates not be increased during the 2022-23 financial year.”
City of Joburg:
The City of Joburg says its proposed electricity tariff increase will result in 9.7% higher service revenue from this source due to its “strategic drive to reduce total electricity losses to a level of 21% in the 2022/23 financial year and turnaround strategy programmes to enhance revenue and profitability of the company”.
It notes that the “average bulk purchase price increase from City Power’s main suppliers (Eskom, Kelvin, Ekurhuleni and Mogale Municipalities) is assumed at 9.2%”.
Tshwane is proposing the largest increase in property rates, being 6%. More than 21% of the metro’s operating revenue will come from this source. The metro says the 9% increases for both electricity and water are justified by the increase in the prices of bulk purchases by the metro.
eThekwini also has a new valuation roll.
It says “there is no proposed property rate increase for residential rates and the City is happy to announce that the rate randage on residential properties has been decreased by 10%” due to the implementation of the new roll.
In its draft budget, the City of Cape Town says: “Nersa approved an average percentage price increase of 9.61% to Eskom for the 2022/23 financial year. This increase translates to an 8.61% increase for municipalities, which in turn translates into a 9.5% average increase for City supplied consumers.”
It says this increase is required because of the “bulk purchases increase, other required expenditure items and a reduction in sales volumes of 1.5% on a restated sales base for 2021/22”.
All metros are conducting consultations with residents this month and final budgets are to be tabled by June, for implementation from July 1.
3. Rental housing market positive:
TPN Credit Bureau says that South Africa’s residential rental market is back in positive territory, citing data from its first-quarter 2022 Market Strength Index.
TPN Credit Bureau’s Residential Vacancy Survey shows how the South African residential rental market has overcome an almost three-year period of imbalance between demand and supply.
The financial services group said that its Market Strength Index is currently 52.9 points, indicating a recovery into a favourable market position, with market equilibrium between demand and supply being reached at 50 points.
An upward trend in the index’s demand strength is likely to assist landlords in recovering from below inflation escalations, it said.
“Although demand for residential rental property has been waning since 2016, the pandemic coupled with the other economic shocks has resulted in a depressed Market Strength Index for 11 consecutive quarters,” said TPN.
The group said that while the lower national vacancy rate has recovered from the double-digit rates in 2021 – 13.31% in the first quarter of 2021 compared to 8.26% in the first quarter of 2021 – it has yet to return to the pre-pandemic level of 7.47% achieved in the first quarter of 2020.
“Despite improved business confidence, slow economic growth, high rates of unemployment and financially constrained households continue to be a challenge in the property sector, slowing down the recovery,” stressed TPN.
Across provinces, the vacancy rate is mixed with the continued growth in the supply of rental housing in some provinces, limiting a return to pre-pandemic vacancy levels:
Home to close to half of all tenants in South Africa, Gauteng has had its vacancy rate recover considerably to slightly above the national average vacancy rate of 8.26% at 8.69%.
Demand for properties in the Western Cape continues on a positive trajectory in its return to low vacancy levels, last seen in 2016 and 2017.
In the second quarter of 2021, the vacancy rate of the Western Cape peaked at 14.38%, and now is at 2.9%, said TPN.
KwaZulu-Natal has had a different first quarter of 2022 compared to the other provinces going from 9.34% in the final quarter of 2021 to 13.26%.
“This is likely the result of the continued impact of the July 2021 civil unrest and riots, which resulted in higher unemployment and the closure of some businesses in the province,” said TPN.
The Eastern Cape has maintained the lowest average vacancy rate of all provinces at 6.3% – more than 2% lower than the national average for the same period.
According to TPN, this lower vacancy rate is partially attributed to the province’s reduced number of rental properties.
4. Oil prices dropping:
Oil prices dropped more than $2 a barrel on Monday, following a second straight weekly decline after world consumers announced plans to release a record volume of crude and oil products from strategic stocks and as China’s lockdowns continued.
Brent crude was down $2.05, or 2.0%, at $100.73 a barrel by 0620 GMT, while U.S. West Texas Intermediate crude lost $2.17, or 2.2%, to $96.09. Last week, Brent dropped 1.5% while U.S. oil slid 1%. For several weeks, the benchmarks have been at their most volatile since June 2020.
The market has been watching developments in China, where authorities have kept Shanghai, a city of 26 million people, locked down under its “zero tolerance” policy for COVID-19. China is the world’s biggest oil importer.
Anxiety about China’s growth was the main reason for the fall in oil prices on the day with Shanghai’s lockdown showing no signs of being lifted and Guangzhou looking to start mass virus testing, said Jeffrey Halley, senior market analyst at OANDA.
“Fears are rising now that if China’s Omicron wave spreads to other cities, its zero-COVID policy will see mass extended lockdowns that negatively impact both industrial output and domestic consumption,” he added.
5. Robotics and coding in schools:
The South African school curriculum is due to offer coding and robotics as its newest subjects, as the world shifts towards a more automation and digitisation.
The Department of Basic Education last year gazetted 18 schools across the country to trial the two subjects, with two in each province.
The 2023 academic year will see Grades R to 3, and Grade 7 being taught the subjects. Grades 4 to 6, and Grade 8 will pilot the subjects this year, followed by Grade 9, in 2023.
The implementation of these subjects aims to better equip pupils to enter the digital era, and prepare them for future careers.
What the experts say
No specific detail has been given as to how the subjects were piloted and what the curriculum would typically look like. However, Amir Patel, Associate Professor at the University of Cape Town’s (UCT) programme convener for the research unit for robotics, welcomes the introduction of the subjects.
Neetu Ramsaroop a lecturer at the University of the Witswatersrands (Wits) school of Business Science suggests a better approach would be to expose pupils to the subjects as opposed to teaching them.
“I think that some subjects taught at school can be detrimental to the student wanting to do the same at university,’ she said, speaking specifically about the challenges of unlearning bad techniques and habits.
While the subjects have clear advantages, it is crucial that the government ensures that schools are well-resourced and that teachers are well equipped to teach them, Patel said.
Here are some of the careers you can go into:
These are the careers you could find yourself in with a coding background, besides your typical careers in computer programming or app development.
- Data Analyst
- Web Developer
- Software Engineer
- Computer Software Analyst
- Computer Software Engineer
- Game Developer
Robotics careers can lead you into sectors such as medicine, manufacturing, military and more.
- Software Engineer
- Maintenance Technicians
- Robotics Engineer
- Automation Engineer
- Sales Specialist
- Hardware Engineer
- Algorithm Engineers
- User Experience (UX) Designer
The job opportunities are endless, and some yet to be discovered in coding and robotics; the exciting thing about them is that they are continuously evolving. Per Indeed, the robotics field has had increasing growth in the past 10 years, with multiple industries taking an interest in the field.