Economy & Business News - 19 February 2024

19 Feb 2024

ECONOMY & BUSINESS

• The Ctrack Transport and Freight Index (Ctrack TFI), the index tracks the road, sea, rail, pipeline, storage and air-freight sectors, forecasts “another year of fairly subdued growth for the transport sector”. This assumes of mediocre economic growth in South Africa this year, forecast at 1.3%, up from 2023’s estimated 0.6%. The latest Ctrack TFI says real transport sector growth is expected to reach 3.7% for 2024, compared with an estimated 3.4% in 2023. Growth in total payload (road and rail freight) is forecast at 5.5% for 2024, versus an estimate of 1.5% in 2023. On the assumption that rail will continue to improve gradually to account for 15.8% of total freight payload (compared with 15.5% in 2022 and 2023), growth of 7.4% is forecast for rail freight in 2024, compared with an estimated 1.5% last year. “Though off an extremely low base, and clearly continuing to underperform relative to other transport modalities given ongoing challenges plaguing the sector, the improvement should be celebrated,” notes the TFI report. “While government approved the Freight Logistics Roadmap at the end of 2023, with proposals to resolve the immediate operational challenges while developing interventions to fundamentally restructure the logistics sector…implementation still needs to be fast-tracked before a notable difference would be evident. More of a medium-term expectation for improvement would be realistic here.” This said, road freight payload is forecast to grow by 5.1% this year versus 1.5% in 2023, which makes it likely to account for 84.2% of total freight payload in the country in 2024. The road freight sector, the biggest among the sectors tracked in the TFI, experienced multiple headwinds in the last few months of 2023, owing partly to operational troubles at South Africa’s ports. According to the TFI, in 2023, heavy-vehicle traffic on the N3 route between Durban and Gauteng increased by only 0.6%, compared with heavy-vehicle traffic on the N4 route between Gauteng and Mozambique, which increased by around 25% compared with 2022. “There is clear evidence that the ongoing operational troubles at South African ports and other challenges have resulted in loads being redirected towards the Port of Maputo, clearly to the detriment of the South African economy,” states the TFI report. “This trend is likely to continue in 2024, as South Africa’s logistical problems will unfortunately not change overnight. The inability to effectively move products to and from markets comes at a cost, which has a negative impact on the whole economy. Not only does it subtract from economic growth, given that products are not timeously available for trading, but the cost of products is typically higher given inefficiencies.”, comments Ctrack CEO Hein Jordt. (Source)

• Hydrogen cars. For the first time, luxury vehicle manufacturer BMW has a fleet of hydrogen-fuelled cars on South Africa’s roads, supported by a green hydrogen refuelling infrastructure set up at its Midrand campus in Johannesburg. The outcome of BMW, Anglo American Platinum (Amplats) and Sasol finding common ground BMW iX5 Hydrogen combines long-distance capability and short refuelling stops with emission-free driving. The BMW iX5‘s 6 kg of hydrogen allows for a 500 km range, with the car’s platinum-based fuel cell turning green Sasol hydrogen into perfectly clean electricity that powers the quiet drive train. South Africa with its superior sun, prime wind and abundance of platinum group metals (PGMs), is one of only ten countries currently has latest green hydrogen BMW. Growing the market for hydrogen-fuelled mobility solutions has been declared a key pillar of the South African government's green hydrogen economy strategy, which will lower carbon emissions meaningfully, unlock investment enormously, create jobs, and drive demand for this country’s magical PGMs. Although hydrogen has unrivalled attributes, including having more than three times the gravimetric energy density of conventional fuel, as with any new technology adoption it has a competitive path to tread. Hydrogen, being a very sustainable fuel, with 75% of the entire universe being hydrogen and 70% of planet earth being covered by water, made up of a hydrogen molecule and two oxygen molecules. There are no carbon emissions in creating it from renewable sources and there are no carbon emissions in using it as the products are heat, electricity and water when utilised. (Source)

• Suzuki Auto South Africa (Suzuki SA) ended 2023 with sales of 49 573 vehicles – up more than 460% from the 8 833 vehicles sold in 2017. Over the past six years, the Japanese compact-car specialist, which imports most of its vehicles from India, broke its own sales record 25 times. In May 2022 it broke through the 4 000-unit barrier, and in January this year welcomed 5 235 new customers to its family. This is a new overall sales record for the brand and the first time that Suzuki has sold more than 5 000 new vehicles in a single month. It also places the brand firmly in third place in the South African new-vehicle market. (Source)

• The building statistics of the private sector. The value of building plans passed (at current prices) decreased by 13,8% (-R16 319,7 million) in 2023 compared with 2022. Decreases were reported for residential buildings (-19,1% or -R11 908,9 million), additions and alterations (-10,5% or -R3 469,5 million) and non-residential buildings (-4,2% or -R941,3 million). The value of buildings reported as completed (at current prices) decreased by 14,8% (-R10 026,9 million) in 2023 compared with 2022. Decreases were reported for additions and alterations (-39,6% or -R6 289,8 million), non-residential buildings (-8,9% or -R1 306,9 million) and residential buildings (-6,5% or -R2 430,2 million). (Source)

• Retail trade sales increased by 0,1% in the fourth quarter of 2023 compared with the fourth quarter of 2022. The largest contributor to this increase was retailers in textiles, clothing, footwear and leather goods (4,5% and contributing 0,9 of a percentage point). In 2023, retail trade sales decreased by 1,0% compared with 2022. Six of the seven types of retailers showed negative year-on-year growth rates over this period. The largest negative contributor was general dealers (-2,4% and contributing -1,0 percentage point). The only positive contributor was retailers in textiles, clothing, footwear and leather goods (5,7% and contributing 1,0 percentage point). (Source)

• Mining production increased by 0,6% year-on-year in December 2023. Total mining production was 0,4% lower in 2023 compared with 2022. The 0,4% decrease in annual mining production followed a decrease of 7,2% in 2022 and an increase of 12,7% in 2021. (Source)

• New vehicle sales decline can be reversed if motor companies, their dealers and even banks can possibly be able to offer “enticing incentives”, in the form of price cuts and lower interest rates says WesBank marketing head Lebo Gaoaketse. After six months of unbroken decline, there is no sign of an immediate reversal of fortunes. Motor industry analysts are almost unanimous in their view that any recovery won’t happen in the first half of 2024. Exactly when may depend on the timing of this year’s general election. (Source)

• Fixed investment in South Africa slumped last year. The value of new projects declined almost 29% to R184.8 billion, as the private sector pulled back on projects as the economic environment in the country worsened. Projects announced by the private sector fell by 147% to R56.1 billion from R203.3 billion in 2022, and in 2023 accounted for only 30% of the total value of projects announced. Capital expenditure projects announced by public corporations or state-owned enterprises slumped for the second consecutive year by 22% to R27.1 billion from R34.9 billion in 2022 and 88.6% compared to R236.9 billion in 2021. (Source)