News in South Africa 5th September:
1. Fuel price decrease:
The Road Freight Association is one of several industries that have welcomed this week’s expected fuel price drop.
After months of unbearable price hikes, the Central Energy Fund’s latest data predicts that 95-octane petrol is expected to decrease by around R2.35c.
For Gauteng residents, this means you could pay at least R23 per litre at the pumps, compared to the current R25.42c a litre.
The association’s Gavin Kelly hopes that this will positively impact the cost of food, which soared as the truck industry tried to keep up with the relentless fuel hikes.
“It would be great news for the transport industry and in turn the consumer if the price of diesel was reduced at the same rate as petrol because that means the cost of logistics would become cheaper and cheaper as we go along – 88% of goods in South Africa have some sort of road journey and most of the consumer goods that you and I buy every day come via truck,” Kelly said.
2. Economic woes ahead:
Weeks of load shedding and the flooding in KwaZulu Natal are expected to be the key drivers behind a decline in economic growth for the second quarter of this year, say economists at the Bureau for Economic Research (BER) – however, the country’s worries extend beyond our own borders.
Stats SA will publish the latest quarterly GDP data on Tuesday (6 September), with the BER anticipating a contraction of around 0.5%.
“The high-frequency figures already available for the quarter showed the adverse impact of intensified levels of load-shedding, the prolonged strike in the gold mining sector and, of course, the severe KZN floods,” the BER said.
“Indeed, mining and manufacturing production, as well as retail and wholesale outlays declined notably in Q2. However, some of the other available data suggests some support from the services components of GDP.”
A decline for the second quarter based on local factors was expected, given the realities of the country – however, the outlook for the third quarter is more worrying.
“With intense load-shedding still prevalent in the early part of the month (August) and the Absa PMI remaining poor in July, actual factory output likely remained under pressure. There is also some crucial confidence data scheduled for release this week, with the RMB/BER business confidence and FNB/BER consumer confidence numbers in focus,” the BER said.
Globally, however, a key focus is the outcome of the European Central Bank (ECB) monetary policy meeting on Thursday.
“After last week’s release of above-consensus and record-high CPI inflation data, coupled with recent hawkish commentary from prominent ECB board members, several analysts revised their interest rate forecasts higher. A growing number of forecasters now expect an aggressive 75bps policy rate hike by the ECB this week,” it said.
Investec chief economist Annabel Bishop said that a global recession is increasingly seen as likely in 2023, driven by higher interest rates and the dulling effect of high inflation on economic activity – particularly higher energy prices – while the Russian/Ukraine war drags on and real disposable incomes shrink.
“Warnings that Europe is already in recession are also emerging, with Germany, the region’s largest economy, seeing contractions in manufacturing production and private-sector activity overall,” she said.
3. High risk of unrest globally:
The risk of civil unrest has spiked across the globe as developed nations and emerging markets alike grapple with spiralling inflation and upheaval exacerbated by Russia’s invasion of Ukraine, according to a report.
Of 198 countries tracked in the Civil Unrest Index, 101 showed mounting risk in the third quarter of 2022, according to research collected by intelligence firm Verisk Maplecroft. That’s the biggest increase since the ranking was developed in 2016, it showed.
The potential for unrest is rising across Europe, which is bracing for a long winter of energy disruption because of the war in Ukraine — as well as the developing world, where price spikes on basic staples have triggered concern of a global food crisis. The threat is set to grow over the coming months, researchers say.
Particularly in developed nations, civil unrest could take the form of demonstrations and labor strikes with the potential to tear at nations’ social fabric.
“These are significant events in terms of disrupting every day life,” Jimena Blanco, chief analyst for Verisk Maplecroft, said in an interview. In emerging markets, worst-case scenarios may involve “rioting, looting, even attempts to overthrow the government,” she said.
Global inflation is likely to linger for months, with no prospect of returning to levels before the twin shocks of the Covid-19 pandemic and the war in Ukraine — even if consumer-price inflation is set to ease somewhat in the second half.
As for civil unrest, while Verisk researchers predicted an increase in risk in 2020, the jump shown by research has been “far worse” than initially forecast, the report said. Inflation levels mean that almost half of countries on the index are categorised as “high” or “extreme” risk levels.
4. Knuckling down on theft:
Eskom, Transnet, the Passenger Rail Agency of SA (Prasa) and Telkom are intensifying collaborative efforts to tackle rampant theft and vandalism of critical infrastructure, which is taking a multi-billion rand toll on their operations.
Led by the group CEOs of the four entities, the Economic Sabotage of Critical Infrastructure (ESCI) Forum was established to provide a coordinated response to the intensifying issue of infrastructure theft.
The four entities – which on Friday hosted a roundtable on the issue – are at the coalface of economic sabotage and together have experienced a staggering 54 000 incidents annually.
Eskom CEO De Ruyter said the forum was in the process of calculating the cost of economic sabotage on their operations. Given Eskom’s own estimates of R16.8 billion, he said he expected the aggregate number to likely be north of R100 billion.
The forum, which was first established in 2020, on Friday highlighted progress in combatting economic sabotage in South Africa. This includes the establishment of a specialised multi-disciplinary unit to address economic sabotage, extortion at construction sites, and vandalism of infrastructure, as well as a Police Task Team on Cable Theft and Damage to Essential Infrastructure.
Regulatory proposals to restrict the trade of illegally obtained scrap and processed metals were also a noteworthy development.
To raise public awareness and enhance data analytics, the forum has developed an app that will provide the public with up-to-date insights into incident trends, shared industry losses and a heatmap view of the hotspots of crime. Industry stakeholders will be able to interact with the analytics at a granular level.
5. Cheaper flights coming:
South Africans looking to travel abroad in the coming months are likely to find flight prices dropping by a quarter compared to fares seen in winter. Flying domestically will also be cheaper, but not by as much, according to data from global travel search site Cheapflights.co.za.
Flying both locally and internationally hasn’t been easy or cheap since pandemic-induced restrictions lifted earlier this year.
On the global stage, carriers and airports, understaffed due to mass retrenchments during the height of the Covid-19 pandemic, have been overwhelmed by travel’s resurgence. This has been most noticeable in Europe, where summer holidaymakers encountered airports in chaos, lost luggage, serious delays, and thousands of cancelled flights.
In South Africa, the demise of Comair, which operated Kulula and British Airways locally, in June dramatically reduced available seat capacity. With domestic demand suddenly outstripping supply and fuel prices surging, flights within South Africa became far more expensive and more scarce, especially for last-minute travellers.
But there is some relief on the horizon, according to Cheapflights.co.za. Fuel prices have cooled, Europe is heading into its quieter winter season, and airlines in South Africa have managed to bring more capacity online to plug the gap left by Comair’s liquidation.
International flights to long-haul destinations between September and November are expected to be 26% cheaper than they were between June to August, according to flight search data provided by Cheapflights.co.za. The international roundtrip price for spring appears to be around R12,700 on average, according to the travel site, compared to more than R17,000 during the winter period.
Domestic flights between September and November are likely to be 12% cheaper than they were between June to August, according to Cheapflights.co.za, with travellers expected to pay around R2,300 on average for a roundtrip this spring.
All information sourced from articles posted by: EWN, BusinessTech, Moneyweb, Fin24, and Business Insider.
