By Chipifa Mhango
The latest dip in the manufacturing production growth rate in October shows that economic recovery will be bumpy under the Covid-19 restrictions.
Manufacturing production declined by 3.4% year on year in October, while growing by 2.6% month on month from September 2020, down from 2.9% in September, according to the latest data released by Statistics South Africa recently.
The manufacturing sector remains key to South Africa’s growth and development, due to its multiplier effect into other sectors of the economy, such as the construction sector. This is especially true of the metals and engineering (M&E) industry, which is a supplier of crucial input such as steel.
It is encouraging to note that manufactured product sales have been consistently rising, reaching R221 billion in October, from R201bn in September. Of interest to us, the Steel and Engineering Industries Federation of Southern Africa, was the continued pick up in basic metals sales. from R45bn to R48bn, over the same period. It is important to note that this was 4.7% lower when compared to October last year.
Several factors are key to recovery in the manufacturing industry, which include a well-managed approach to Covid-19 restrictions to ensure that we do not return to level-five type lockdown measures, a stable labour market environment, a stable monetary policy, low import penetration of manufactured goods into the local economy, stable and low-cost electricity supply, increased investment into the sector, and the steady implementation of the government’s economic stimulant recovery plan announced in October.
Chipifa Mhango is the Chief Economist Steel and Engineering Industries Federation of Southern Africa.
The Star