With the festive celebrations now behind us and having ushered in a new year, all indicators point to 2023 being tougher than the year we leave behind.
For the most part 2022 was characterised by global and domestic turmoil, imported inflation, record levels of load-sheading and political uncertainty.
We come into 2023 knowing that things won’t be easy, the challenges facing us are many. South Africa’s economic outlook doesn’t look good and there is little investor confidence. The notion of job creation, on the back of an alarming high unemployment rate, has become elusive.
The persistent load-shedding, the worst in more than 10 years, has almost erased all the sector’s post-Covid-19 gains and the energy crisis shows no signs of ending.
The year is already shaping up to be another busy and challenging one. In February SEIFSA will release the State of the Metals and Engineering Sector Report 2023, which will provide a full picture of what lies ahead for the sector, with inflation continuing to put pressure on the global economy and load-shedding remaining the biggest local headwind.
One of the key issues facing the Metal and Engineering (M&E) sector is the continued lack of public infrastructure spending. Local suppliers urgently need to be given preference when it comes to government projects if the sector stands any chance of lifting itself out of the doldrums.
All signs indicate that the tough global conditions of 2022 are likely to persist in 2023, with a hawkish US Federal Reserve setting the tone for other central banks on monetary policy. The focus on containing inflation tends to lead to a slowdown of activity, which has a significant effect on demand and investment in the M&E sector, along with the sectors it supplies, including mining, automotive and construction.
The other big global issues for 2023 is the continued conflict in the Ukraine. The conflict is raging on – nearing a full year since Russia’s invasion on February 2022 – disrupting global supply chains, contributing to the global economy slowing down further as the conflict continues to spur inflationary pressures, sapping confidence and increasing risks worldwide.
Meanwhile, China is battling both high Covid-19 infection rates and the fallout from shutting down its economy in 2022 as part of its zero-Covid-19 policy – it will take time for it to recover from both of these crises.
Locally, the government’s multiple service delivery failures are likely to continue to plague communities and the sector this year, with energy, logistics, roads, rail and water – staples of any manufacturing sector – stoking an already high unemployment rate and pilling extra pressure on the government as the cost-of-living crisis intensifies.
SEIFSA will continue to press the point that private-public partnerships are the best option of resolving these issues, with the private sector offering both skills and financial resources. Moreover, in a less supportive global economic environment, domestic economic policy must do a heavier lifting. A clear and well-thought through industrial policy plan is an absolute must if the sector is going to grow. The SEIFSA office will continue to play an active role in contributing to the shaping this agenda.
As we look forward to another challenging year, SEIFSA stands ready to be at your service and support you in every way we can in 2023.
We wish you a safe and productive 2023.
Lucio Trentini
Chief Executive Officer