Markets & economy: On the commodity boom and other South African fables (and foibles)

Just as the economic destruction from the COVID-19 pandemic rose to crisis levels, strong commodity export prices swept in to alleviate South Africa’s fiscal woes. To pin our hopes for the entire domestic recovery on a cyclical pricing story may prove foolish, especially with a spluttering local production base and a host of domestic challenges. With inflation fuelling import and export account imbalances, it is critical for both us and our African continent peers to tighten our belts and prepare for what may be tough times ahead. Thalia Petousis discusses below, and in our latest podcast.

The past 40 years of global order and NATO-enabled peacetime trade have allowed intercontinental supply chains to flourish, facilitating worldwide growth and poverty reduction. While the US-China trade war, Brexit, and even the COVID-19 pandemic sowed the seeds of doubt in such trade alliances, the Russia-Ukraine war has arguably tipped the scales even further in favour of both domestic protectionism and deglobalisation. Both of these forces are surely the enemy of low prices, and are wreaking havoc in already-disrupted supply chains.

Full article on https://www.allangray.co.za/latest-insights/markets-and-economy/on-the-commodity-boom-and-other-south-african-fables-and-foibles/

July 29 2022 By Thalia Petousis - Allan Gray