GDP and your MLM
In recent South African history, there have been many occurrences that have impacted heavily on its economy and welfare. These occurrences have had many repercussions in several markets and sectors of the country and have affected not only economically, but socially as well, causing both stirs of unrest cheers of jubilation as these events were broadcasted nationwide. The most recent of these events is the mining strike taking place in Platinum sector. This event, which still remains unresolved despite much negotiation and discussion between parties, has impacted very heavily on the economy and lead to some uncivil acts, on both sides, which have made news not just nationally, but internationally.
The aim of this is to explore the effects of this event on the Aggregate Supply and Aggregate Demand of South Africa. This will be done using graphical and statistical evidence from the South African Reserve Bank and Stats SA, with the use of other sources as references for why these effects take place and how they may be resolved in the future. The essay will also look at the GDP of South Africa in recent history, what has affected it and how the strike is currently affecting it. The strike has had knock-on effects into many sectors and markets and this will be briefly discussed to show the magnitude of the impact the strike is having and should have in near future if this issue remains unresolved.
Aggregate Demand and Aggregate Supply
When looking at the AD-AS model, we must also note that these curves, which are a useful tool in determining the Gross Domestic Product and the consumer confidence and their states of income of the country, are initially derived from other markets and these would also be adversely affected. These changes to the AD-AS model would affect Unemployment, Price Level and Output in the goods market.
Despite not contributing as significant a share as it did in the past, the mining sector of the country still contributes around 60% of all exports and any effect to this would change the GDP of the country, as foreign currency greatly boosts South African GDP due to the currently weak (and further weakening) South African Rand (Wikipedia, 2014). Of this percentage, roughly 40% are due to Platinum Group Metal (PGM) exports with the other large portion attributable to Gold exports which is still a big contributor. This breakdown of the role of Platinum and PGMs will be further explained in the next section.
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