Capital Equipment News December 2019

MARKET REVIEW – 2019

Surviving the tide of a downward cycle

The International Monetary Fund recently revised South Africa’s growth forecast for 2019 from 1,2% predicted in April to a paltry 0,7%. The story is the same in southern Africa, where GDP growth has been sluggish, falling from 4% in 2010 to about 1,2% in 2018, with projected growth of around 2,2% in 2019. How did the capital equipment fare in these tough economic conditions this year? By Munesu Shoko .

S outhern Africa contributes about 25,6% to the continent’s gross domestic product (GDP), second after West Africa’s 26,3%, according to the African Development Bank. Despite the region’s economic size, GDP growth has been sluggish in recent years. Causing the low growth are the major headwinds of high inflation, rising government debt and low commodity prices. South Africa contributes about 68% to the region’s GDP but grew at less than 1% in 2018. The country is by far the largest capital equipment market, not only in southern Africa, but in Africa at large. The low economic growth has had a severe impact on the capital equipment market, with the construction equipment sector being the hardest hit amid low infrastructure development activity. However, the commercial vehicle market seems to be resilient in the face of tough economic conditions. State of affairs Bell Equipment's observation was that at half year the market was down 12-13% compared with the same period in 2018. However, Duncan Mashika, MD Bell Equipment Sales Africa (BESA), says by the end of the third quarter, market contraction had slowed to around 10-11%. Ross Collard, newly-appointed MD of HPE Africa, notes that between January and October 2019, the total market for tracked and mini excavators went down 13% and 21%, respectively, compared with the same period in 2018. “The total market for wheel loaders was down 3% during the first 10 months of the year, compared with the same period last year,” notes Collard. Francois Marais, sales & marketing director at Pilot Crushtec International, says economic activity throughout South Africa has been turbulent throughout the course of the year, with only 1,3% GDP growth reported for Q2. However, he notes that the

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