An impressive recovery in global goods trade and an average 30% rise in commodity prices over the past year have provided a much-needed uplift for the South African economy at a time when good news has been in short supply.
The global economic outlook continues to improve. The US experienced 6.4% growth in the first quarter and Bloomberg Economics expects growth in the second quarter to come in at 9.6% in the second quarter – lifting it above its pre-crisis growth level. Sentiment towards the Eurozone has improved on expectations that the region’s economy may have turned the corner.
The steep increase in commodity prices has been the biggest contributor to South Africa’s much-improved trade fortunes, underpinned by higher export earnings from precious metals, base metals, mineral products and precious stones. The World Bank expects energy prices to be more than one-third higher on average this year compared to 2020, with oil averaging $56 a barrel. Meanwhile, metal prices, like copper and iron ore, are expected to climb 30%, and agricultural prices are forecast to rise almost 14%. “Almost all commodity prices are now above pre-pandemic levels,” it says.