Agricultural industries across the world have faced headwinds over the last few years, diminishing any gains since the COVID-19 pandemic.
According to Absa senior agricultural economist Marlene Louw, growth and confidence are deteriorating, especially in South Africa where a number of factors are having a negative effect on sentiments. These include inefficiencies in ports, ongoing load-shedding, increasing political uncertainty, high interest rates and consequently loan repayment problems, and climate-related issues. "Interest rates are biting and 'higher for longer' seems to be the most plausible scenario," she said.
"Globally, increased geopolitical uncertainty will be a key market risk that will add to this list, as it will increase shipping disruptions, reignite global goods inflation and disrupt energy supply."
The global and South African economy is very much dependent on growth in China to lift economic prospects. But Dawie Roodt, chief economist at the Efficient Group, noted that the expected burst in China's property bubble will push economic growth down further from the 12% per annum average of the last few years, to 3% this year.
"China is no longer the star performer that will lift our prospects. Their population contracted last year for the first time since 1960, which had major negative consequences for their economy," said Roodt.
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