When talking economics, consider the South African provinces
Economic growth is often quite lumpy. A national measure of gross domestic product (GDP) is useful to gauge how a country is doing as a whole. Still, it misses the fact that economic activity varies across towns, cities and regions.
Stats SA’s most recent quarterly GDP release provides national data for the entire year of 2020. It also includes geographical nuance with provincial GDP figures for 2019.
South Africa’s real GDP grew by 0,2% in 2019. At a national level, the year was characterised by a slump in economic activity across various industries, most notably in agriculture, construction, mining and manufacturing. Increased production in finance, real estate & business services, government and personal services helped keep national GDP growth in positive territory, albeit by a whisker.
The map below illustrates how economic growth varies across space. Let’s consider the national growth rate only: we might breathe a sigh of relief, having narrowly escaped economic downturn as a national collective. But a quick look at the provincial data shows that 5 provincial economies shrank in 2019.
There was economic expansion in the 3 largest provinces (in terms of GDP); in 2019, Gauteng, Western Cape & KwaZulu-Natal accounted for 64% of the country’s GDP.
Northern Cape recorded the most significant decline in economic output, followed by North West. Both economies were dragged lower mainly by the poor performance of mining and agriculture.
In fact, mining is the largest industry in both provinces, as well as in Limpopo and Mpumalanga. Any major movements in mining activity will affect the economic fortunes of these provinces, with corresponding consequences for the living conditions of the people who live there.
Gauteng, on the other hand, recorded the highest provincial growth rate. The 0,6% rise in economic activity was mainly driven by finance, real estate & business services, which is the dominant industry in that province. Agriculture is the smallest industry in Gauteng, so its poor performance affected Gauteng far less compared with the other provinces.
Not only does economic activity vary across industries, but it also varies across space. Moreover, industries themselves are clustered in different regions of the country.
So when considering economic growth, going beyond the national figure provides a more valuable, nuanced picture.
International travel restrictions to South Africa – NEW online tool
Which countries may visit South Africa at present, given the level of restrictions?
And which countries may South Africans visit?
To help us grasp this complex net of international regulations, a new and rather useful online tool, https://www.skyscanner.net/ travel-restrictions, emerged, making it easier to comprehend.
The map illustrates that:
- 121 countries have major travel restrictions for South African travellers.
- 97 countries have moderate travel restrictions for South African travellers.
South Africa have too many international restrictions against it, at present.
South Africa should open up, but cannot unless an aggressive vaccine roll-out is underway.
A far more intense vaccine rollout is urgently required to restore global connectivity and economic stability.
South Africa is a very open economy and rely on the rest of the world to conduct business, for both exports and imports of good and services.
Temporary – pandemic induced – autarky in terms of international travel is economic suicide in the modern world of hyper connectivity.
Access the new online tool by clicking on this link – https://www.skyscanner.net/travel-re-strictions. .
South Africa: Headline inflation slowed to 2,9% in February 2021
This is the 3rd time in the past 12 months that the annual rate slipped below the bottom end of the South African Reserve Bank’s inflation target range.
Not all products in the CPI basket are sur- veyed every month. For example, medical in- surance (medical aid) is usually measured in February (which picks up the main increase for the year) and again in April. This has a large impact on the monthly change in the CPI in February, whereas there is a cancelling effect when it comes to the annual rate.
Medical insurance (medical aid) is the single biggest item in the CPI basket, taking up 7,6% of total household spending. The aver- age annual increase across medical aid schemes surveyed in February 2021 was 4,7%, substantially lower than the rate recorded in February 2020 (9,6%).
Doctors raised their fees on average by 3,2% in the twelve months ending February 2021 while dentists increased their fees by 4,3 over the same period.
Prices for milk, eggs and cheese products increased by 6,4% from February 2020. The average price of a two-litre carton of fresh full-cream milk increased from R28,03 in February 2020 to R29,27 in February 2021. Half a dozen eggs would have set you back an average of R19,03 in February 2021, higher than the R15,87 recorded in February 2020.
Global economic recovery is accelerating, buoyed by vaccinations
The global economy is poised for a substantial pickup in economic activity for the rest of 2021 and 2022. World GDP is on track to grow 5.6% in 2021, with a further 4.4% rise in 2022. But varying fiscal policy responses to the pandemic, vaccination rates, and underlying factors will influence growth rates across countries.
The United States is expected to expand the fastest out of the advanced economies in 2021, due in part to its aggressive fiscal stimulus. A resurgence of the virus in Europe and the smaller fiscal response will cause EU growth to lag, but the recovery should accelerate once vaccinations are scaled up and consumer spending returns in the latter half of 2021. Economic recovery in Japan and the United Kingdom are hindered by the decision to bar foreign visitors from the Tokyo Olympics and the Brexit transition.
Among emerging economies, China and India lead the recovery, with real year-over-year GDP growth for 2021 expected to reach 8.5% & 10.5%, respectively. Brazil is the only major economy forecast to contract in 2021, as a resurgence of the virus and the strained healthcare system weigh heavily, but modest year-over-year growth will return in 2022.
This PIIE Chart was adapted from Karen Dynan’s blog, “Global economy poised to expand faster, buoyed by vaccinations”
Brexit transition contributes to record drop in EU trade
“UK trade figures for January were released today, revealing a record drop in exports and imports to and from the European Union. At first glance, this may seem like a clear and ominous effect of the Brexit transition ending on 31 December. On closer inspection though, the causes and longer-term consequences aren’t quite so black and white.
Firstly, for full context we need to take a look at the month with which we are comparing to. In November and December the ONS reports seeing “increasing imports and exports of goods…these increases were consistent with potential stockpiling of goods from the EU in preparation for the end of the EU exit transition period.” This is a phenomenon which was also observed in the run up to the two previous Brexit deadlines in 2019. Looking at the wider picture once more, the start of a new nationwide lockdown at the beginning of January may also have played its part in the decreases.
The disruption to trade at the start of the year has however been well documented, and certainly played a role in the dramatic drop. The main question is whether this represents a new status quo or rather an unfortunate but fleeting Brexit hangover. The ONS cites its own ‘Business insights and impact on the UK economy’ data which suggests that these ‘teething problems’ have already begun to ease, with the more granular figures showing signs of trade starting to increase towards the end of the month. Additionally, the share of businesses reporting that they were unable to export/import started to decrease as the month wore on.
The view from outside the ONS though is somewhat more negative. Quoted in The Guardian, Samuel Tombs, the chief UK economist at the consultancy Pantheon Macroeconomics offered this prognosis: “Brexit is best seen as a slow puncture, rather than a sudden blowout, with the costs gradually accumulating in the form of lower investment and immigration than otherwise would have been the case.” Adding to this sentiment, Suren Thiru, the head of economics at the British Chambers of Commerce, said: “The practical difficulties faced by businesses on the ground go well beyond just teething problems and with disruption to UK-EU trade flows persisting, trade is likely to be a drag on UK economic growth in the first quarter of 2021.””
This article first appeared on https://www.statista.com/chart/24402/change-in-uk-trade-eu-non-eu/
China First Major Economy to Issue Digital Currency
The Chinese government has begun to issue blockchain-powered digital currency to its citizens. The Wall Street Journal reports that 750,000 recipients have been determined by a lottery system and can already spend their digital Yuan in stores and online using a special app.
App-based payments are already very common in Chinese brick-and-mortar businesses, so merchants were quick to adapt to the government’s new offer. Starbucks and McDonald’s are reportedly among those already accepting the digital Yuan, as is the Chinese Communist Party.
Ubiquitous digital payments and tight government surveillance have led to a plethora of payment data already available to Chinese administrators. This knowledge on how people spend money will only grow with the implementation of the digital Yuan, even though the country’s Central Bank has said it will limit traceability and create what it calls “controllable anonymity.” With the launch of the digital currency, every Yuan in circulation will either exist as physical or as digital currency. Analysts expect the Chinese government to raise the amount of digital currency in the future, thereby lowering the amount of physical currency available in the market. Some even think China plans to make all Yuan digital at one point.
China is only the second country and the first major economy to officially launch a blockchain version of its own currency. According to Bloomberg, the sand dollar of the Bahamas Central Bank launched last year and was already being accepted in stores in the capital Nassau. Bloomberg identifies four more countries – South Africa, India, Pakistan and Thailand, with concrete plans to launch their own official cryptocurrencies soon. Like some other phone payments, official blockchain currencies have the ability to reach the unbanked, making them interesting for the developing world.
This article first appeared here, https://www.statista.com/chart/24571/central-bank-digital-currencies-around-the-world/
Chinese shipping indices show a surge in the price of shipping goods out of 2 major Chinese ports
The Shanghai Containerized Freight Index and the Ningbo Containerized Freight Index, representing 2 of the 3 biggest container ports in the world, maintain price levels 3x as high as a year ago, showing an increase in demand driven by the coronavirus pandemic.
While Q4 of the calendar year usually sees an increased demand – and increased price – for shipping out of Asia as the Western world heads into the holiday season, a strong post-lockdown restocking demand elevated the indices to new heights in December and January.
Shipping prices also surged because containers in Asia are becoming scarcer, instead piling up in North American and European ports.
While the first wave of lockdowns in the coronavirus pandemic caused major economic turmoil and suppressed consumer spending, more workplaces are staying open during the 2nd wave and people are spending again, favouring goods as services spending is still majorly restricted by coronavirus rules.
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