Financial analyst, Lloyd Mlotshwa, warned that the country was not on firm footing with sustained GDP growth hedged against global commodity prices.
“The contribution of other key sectors to GDP growth is declining, namely manufacturing whose anticipated GDP growth in 2012 downgraded from six percent to 2.3 percent and tourism whose anticipated GDP growth in 2012 downgraded from 13.7 percent to 2.3 percent,” Mlotshwa said.
“The country finds itself over-reliant on the performance of mining and agriculture exports, which are vulnerable to shocks in global commodity prices. We have already seen evidence of this in the 2011-2012 cotton season where lint prices fell from $2.43 per pound to $0.77 per pound,” he added.
According to the World Bank Commodity Market Outlook, commodity prices ended 2012 close to where they began, but major global events created significant upward and downward price movements through the course of the year.
“The first half of 2012 brought declines in most commodity prices, especially energy and metals as European sovereign debt troubles intensified and emerging economies, especially China, slowed,” the World Bank said.
The World Bank expects most commodity prices to ease marginally in 2013 while agricultural commodity prices are also forecast to decline by 3.2 percent.
Further, the World Bank warns that the 2013 commodity market outlook is subject to a number of risks such as global economic conditions and weather patterns in the case of agricultural commodities.
The Food and Agriculture Organisation (FAO) expects high and volatile food prices to continue.
“Demand from consumers in rapidly growing economies will increase, population continues to grow, and any further growth in biofuels will place additional demands on the food system.
“On the supply side, there are challenges due to increasingly scarce natural resources in some regions, as well as declining rates of yield growth for some commodities. Food price volatility may increase because of stronger linkages between agricultural and energy markets, as well as an increased frequency of weather shocks,” FAO said.
Post published in: Business