During the past year, there have been increasing and impressive recoveries of over 30% in
commodity prices, which has given South Africa’s economy a much-needed boost, especially during
a time that good news has been in short supply.
With the value of exports rising to all-time highs, commodity prices have been ahead of the
expectations of many analysts as well as economists. During the past year, the IMF All-Commodity
Index has seen an increase of 26.8% with copper prices having reached a 10-year high at over
$10,000 a ton.
Simultaneously, palladium and iron ore both reached all-time highs recently while several other
commodity prices have achieved prices higher than pre-pandemic levels.
Can high commodity prices save South Africa’s Economy?
As the global economy sees improvements with vaccination efforts increased and there is continued
phased return to normal operations, major economies such as the United States experienced 6.4%
growth during the first quarter of 2021, while the European zone seems to have turned the corner as
In addition, the South African economy has been a large beneficiary of these favourable global
dynamics, especially with trade figures outperforming expectations for the past few weeks, with the
trend anticipated to continue.
The steep increases that commodity prices have experienced have been the largest contributor to
improved trade fortunes in South Africa. This was underpinned by higher export earnings where
precious metals, base metals, and others are concerned.
With mining operations normalising slowly, it benefited export numbers which subsequently
increased export earnings. There have been improvements in imports which point towards strong
trade surpluses in the months to come.
There have been numerous trade rebounds reported for many emerging markets alongside
advanced economies and while the commodity picture looks favourable, there is still uncertainty in
the durability of some prices that must be considered and anticipated.