Energy use is a pivotal element in the economic life of any country, especially in a developing economy such as South Africa. Based on trends such as load-shedding and oil supply shocks, it is essential to investigate the relationship between electricity and oil consumption to economic growth. This is particularly relevant in the South African context, where policy-makers have had to grapple with excess demand for electricity. The Johansen cointegration and vector error correction model approaches have been used to examine a short- and long-run relationship between energy consumption and economic growth. It has been found that electricity consumption has a negative relationship with economic growth and oil consumption has a positive relationship. Therefore, conservation policies like electricity rationing may be implemented, thereby proving to be beneficial to the broader economy. To offset periodical effects such as oil supply shocks, the country should keep high or adequate amounts of oil reserves and/or invest in oil exploration. It is highly recommended, regarding electricity, that the government is to adopt policy measures and direct interventions to promote an efficient use of electricity.
South Africa has targeted the oil and gas sector for investment through the industrial action plan as a special economic zone. This paper focussed on the effects of oil prices and exchange rate movements in the oil and gas stock returns using the GARCH - GED model to incorporate volatility. Additionally, the paper estimates causality effects through the pairwise Granger causality techniques using secondary monthly data for the period 2007 - 2015. The findings where that change in oil prices had a positive and significant mean effect on oil and gas sector stock returns. Furthermore, changes in exchange rates had a negative and significant mean effect on the sector returns. Volatility clustering was found to be present in the sector stock returns, but volatilities associated with each of the significant variables do not last for long before it fades away. It is highly recommended that market players or investors and portfolio managers should have a keen interest on the exchange rate. While policy makers and regulators should strive to have stable exchange rate movements to offset unexpected or sudden decline of the exchange rate, depreciation. This has the detriment of additional costs through oil prices purchase by companies in the sector.
This study scrutinises drivers of trade performance in the SADC region amid the full implementation of the African Continental Free Trade Area (AfCFTA). Where the short and long-run impact, through the Autoregressive Distributive Lag (ARDL) and forecasts through IRF of external debt, debt service cost, GDP per capita, Foreign Direct Investment (FDI), and Terms of Trade (TOT) on the trade balance is interrogated. In the long run, external debt, debt service costs, and GDP per capita negatively influenced the trade balance. TOT was found to be an insignificant predictor. This implies that these variables were among the significant drivers of trade balance while the impact of terms of trade is negligible in the region. FDI positively impacts regional trade balance, which informs us that it acts as a stimulus for trade in the area. Short-run results revealed that external debt and GDP per capita affected trade balance positively, while debt service costs, FDI and TOT were found to have a negative impact. IRF results showed that shocks from external debt and per capita GDP pose a positive instant impact, while shocks from FDI and TOT were proven to worsen the trade balance in the region. The region needs an FDI stimulus.
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