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Port Elizabeth - The Eastern Cape economy experienced a
dramatic turnaround after having contracted for the previous seven months,
according to the Sake24 and BoE Private Clients Eastern Cape Barometer.
"The Eastern Cape economy grew 1% quarter-on-quarter –
and for the first time in seven months was in positive territory," said
Economists.co.za economist Mike Schüssler, who compiled the Eastern Cape
barometer.
Schüssler said the turnaround could be ascribed to the
continuing performance of motor vehicle sales, despite global expectations and
the slowdown.
"Another interesting trend is that, while electricity
consumption in the remainder of the country was down mainly because consumers
are cutting back to save money, in the Eastern Cape there was a year-on-year
(y/y) 5.1% rise in consumption," he said.
This indicates growth in economic activity in the region.
Although there has been a decline in government expenditure,
the growth index was positive, further strengthening the province's turnaround.
"Property sales in September and October were positive,
although home loans were somewhat down, showing increasing spend on
property," he said.
Schüssler noted that this trend could be attributed to,
inter alia, the bigger deposits people are putting down on property.
"We have more dedicated buyers, who are looking for the
appropriate property and have saved money for a deposit. They are therefore
more committed to the property that they eventually buy," he said.
"There are also interesting trends in timber and cement
sales. Sales of timber swelled 27% y/y, indicating significant growth in work,
especially in the informal sector," he said.
Land transport was 8.5% up and the volumes of freight
handled at the province's ports showed good growth of 21.4%.
The 15.1% improvement in advertising sales can largely be attributed to an increase in radio advertising.
Even agriculture, which was heavily impacted by the recent
drought, is showing signs of recovery and was only 10.9% down y/y. The August
decline was 15%.
Samantha Venter, operations director of the Nelson Mandela
Bay Business Chamber, reacted by saying that, however modest, the Eastern Cape
is showing positive signs of recovery.
"The increasing cost pressures on the manufacturing
sector – such as from wage demands, electricity tariff increases, freight
haulage, proposed new taxes on businesses, etc – are nevertheless a source of
concern because they impact the global competitiveness of the region's
manufacturers, limiting their ability to secure essential export orders,"
she said.
Venter said growth in the manufacturing and production
sectors is essential, but hampered when input costs for manufacturers increase.
"Our ability to attract new investment is also
constrained by the rising costs of doing business.
"The signs of a healthier provincial economy are very
encouraging, and sustainable only if issues affecting the productive sectors of
the economy are resolved,” she said.
Dean Biddulph, DA spokesperson on economic development,
declared the latest economic data for the province extremely encouraging.
Schüssler warned about the province's huge dependence on the
motor industry.
"Taking everything into account, I take my hat off to
the province, which has ended a very difficult year on a high note."
- Sake24
For business news in Afrikaans, go to Sake24.com.
For more news on the Sake24/BoE Private Clients barometers, go to www.fin24.com/barometer.
