The impact of the global financial crisis on the South African steel trade industry

Abstract

The USA's financial and economic crisis spilled over and resulted into a "global" financial crisis (GFC) that impacted several developed and developing countries. Regarding the latter, trade affairs have been identified as being a major growth component for the economies of developing countries. In particular, numerous studies have highlighted the importance and benefits of international trade on a country's path to promote economic growth rates. In lieu of the above, the main aim of this study is to assess the impact of this crisis on the South African steel trade industry, with special emphasis on the periods 'before', 'during' and 'after' the GFC. Through efficient targeting of a specific sector and its industry within the South African economy, government entities would be able to determine the extent that they could gain effective targeting and allocation of resources. Past research papers, relevant theoretical frameworks and data have been taken into consideration to form the basis of our analyses. In essence, we analysed the South African economy as a whole and tried to identify its relationship with the trade industry during this study period. Therefore, a composition of South Africa's economic activities and an economic profile was also determined and discussed. In addition. we implemented Porter's competitive strategy and diamond theory, to identify whether the South African steel trade industry has a competitive advantage. From the analyses we concluded that the steel trade industry of South Africa was adversely impacted in 2009. the 'during' period of the GFC and showed the 'after' period as the recovering period for the industry. Evidently, there is a positive correlation between the steel trade industry of South Africa and the country's economy ' before', during' and after' periods of the GFC. This positive correlation can be contributed to the trade sector's influence on the economy's overall state, as imports and exports have been identified as a key aspect to economic growth, and vice versa. Identified recommendations include the need for more research on the South African steel trade industry's competitors, in order to realize possible opportunities for the industry itself and realize increased growth patterns, as well as extensive promotion that could lead to amplifying trade flows benefiting the South African economy.