Region/Countries: Africa and the Middle East, South Africa Industry: Manufacturing Date: June 2016

Why this is important to Wisconsin businesses: Regional trends and currency fluctuations have driven growth in spite of the economy's overall shift toward a service orientation.

Manufacturing production in South Africa has increased 2.9 percent in real terms year over year as of April 2016. Fast-growing sectors include electrical machinery (up 17 percent year over year), telecommunications inputs (up 10.4 percent) and inputs into petroleum and petrochemical sectors (up 8.1 percent). Motor vehicle parts and accessories rose 10.2 percent. These subsectors have all seen increased improvement since the South African currency has fallen, creating opportunities for South African exporters to take advantage of lower relative cost structures.

South Africa's economy has shifted toward more of a service orientation in the past two decades, while certain subsectors in manufacturing have remained strong. The shockingly quick rise in gold (over 10 percent) due to Brexit fears will certainly stimulate the mining sector. Although the South African rand has fallen in tandem with other emerging market currencies, the price of precious and semiprecious metals has increased remarkably, creating a huge spread between revenue and costs, which will surely result in further demand for equipment in the mining sector. This demand will drive ancillary manufacturing supporting the mining sector, which makes up 10 percent of South Africa's economy.

South Africa is the logistics and distribution hub for all of southern Africa.  Average regional growth is 4 percent, although in South Africa, growth has been flat at close to zero percent. Other countries in the region have done well recently, creating strong demand for manufactured goods. Wisconsin machinery manufacturers are needed to support all of the above-mentioned sectors throughout sub-Saharan Africa, and can connect with these opportunities through Wisconsin’s trade representative for the region.