Friday, July 1, 2022

Nation in Conversation: the state of the SA economy

Estimated reading time: 2 minutes

After a two-year absence, Nampo is in full swing again and as in the past, a series of Nation in Conversation discussions was presented. The NIC sessions address important topics in the South African agricultural landscape.

The Tuesday morning session focused on the state of the economy. Theo Vorster, CEO of Galileo Capital, facilitated the panel discussion. The panel consisted of Kokkie Kooyman, portfolio manager at Denker Capital, Prof Ferdi Meyer, director of the Bureau of Food and Agricultural Policy (BFAP), and Hugo Pienaar, chief economist of the Bureau for Economic Research (BER).

Russia-Ukraine conflict

The panel discussed the long-term effects of the current Russia-Ukraine conflict on the global economy, and its direct effect on the South African economy. This comes after 2022 kicked off on a positive note. The economy was, however, pulled down by the conflict and the recent floods in KwaZulu-Natal.

Read another Nation in Conversation article.

The Reserve Bank’s upcoming announcement of an interest rate increase on 18 May, has had a further negative affect on the South African Rand and economy, said Pienaar. In a published forecast of the Rand, Pienaar stated that the conflict will affect the economy over the next five years as countries are now localising the sourcing of produce, instead of importing goods.

Investing in cryptocurrency

Kooyman added that the combination of COVID-19 and the Russia-Ukraine conflict caused a sharp retraction of the economy, with expected hikes in the prices of inputs and outputs. Kooyman said that previous market projections were euphoric given the low interest rates at the time. In these difficult economic times, consumers tend to buy and invest in crypto currencies and utilise the profits from their investments to add to their income. Kooyman cautioned consumers to be wary of promises of too high profit margins yielded by crypto investments, especially in light of the recent Terra crypto currency issue.

Prof Meyer added a positive note by referring to the development of the Agriculture Masterplan. The plan has gained momentum with social partners having been consulted and successes relating to value chain deep dives. The deep dives aimed at looking into ways to improve the supply chain from the farmgate to the consumer. – Phillip Crafford, Plaas Media

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