The Citizen (KZN)

Two sectors may be SA’s economic revivers

- Amanda Visser

Statistics SA predicts that the second quarter of this year will become known as the “pandemic quarter”. Gross domestic product (GDP) fell by just over 16% between the first and second quarters.

However, according to Pricewater­houseCoope­rs (PwC) chief economist Lulu Krugel, mining and agricultur­e did surprising­ly well. These two sectors may well form the base from which the South African economy can rebound – if managed correctly.

Speaking at this year’s virtual South African Institute of Tax Profession­als (Sait) Tax Indaba, Krugel said both industries appeared to be less harmed by the impact of the Covid-19 restrictio­ns than the rest of the economy.

“It would be interestin­g to see the response in terms of policy. I am keeping a keen eye on these industries to see if we will be making the right policy decisions.”

An increase in maize exports, as well as rising internatio­nal demand for citrus fruits and pecan nuts, helped the agricultur­al industry expand by 15.1% during the second quarter.

“Locally, the baking craze that gripped the country during the lockdown increased the demand for home cooking products,” Statistics SA said.

Mining has always been an important sector because of the foreign exchange it generates and agricultur­e is important for food security.

According to Invest SA, the mining sector contribute­s about 7% to South Africa’s GDP and accounts for 25% of the country’s total export earnings.

Krugel said other industries were also bouncing back fairly quickly, such as the retail sector, where trade volumes have picked up. She said before Covid-19 hit the country, South Africans only did 5% of their retail shopping online.

“That has drasticall­y changed. There are companies who have seen an increase of anything from 200% to 400% in online sales.”

According to Stats SA, expenditur­e on communicat­ion, housing and education was up in the second quarter. “Cut off from family and friends – and having to suddenly work and study from home – many consumers increased their spending on communicat­ion services, most notably on data.”

However, telecommun­ication companies reported revenue losses due to inability to sell or fix cellphones during the initial hard lockdown.

Krugel said the transport and finance and insurance sectors can bounce back “very quickly”, especially finance and insurance because it has been managed well and comes from a strong base.

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