Bloemfontein - The Free State economy is again showing growth, according to the Sake24 and BoE Private Clients Free State Barometer.
But this does not mean that all sectors are without problems, and concern still exists about the sustainability of large increases in government sector spending.
The province’s growth index experienced its biggest increase since 2006, rising 10.3% in March this year compared with the same month last year. In the same period the overall index was 9.8% up.
Economists.co.za economist Mike Schüssler, who compiled the Free State barometer, said the rapid and sustained growth over the past 11 months had surprised him. During the recession the Free State economy had suffered smaller declines than the other provinces. But unfortunately certain sectors, like manufacturing, were also not rising to the same heights as those reached in other provinces.
In March the government index reflected the biggest increase (20%). This was largely brought about by a massive 40% increase in expenditure by national government within the province.
This increase is exceptionally high, said Schüssler. It might be attributed to the fiscal year ending in March and certain budgets needing to be spent before month-end.
Schüssler expressed concern about the sustainability of such huge increases in government expenditure.
A highlight in the March Free State barometer was the sustained recovery of the financial, property and business services sectors (10.3% up). It was the first time since 2006 that this index had shown a double-digit improvement.
In March, property transfers increased 15.8% year-on-year (y/y). In the same period, hire purchase agreements were 2.2% up and asset management 13.2% up. But it is the 26.6% improvement in advertising sales that best indicates economic recovery.
According to Christo du Randt - who manages the community newspaper Krant and is an expert in the local advertising market - the vehicle market recovery had had a positive impact on advertising sales. But an improvement is being seen across all sectors, and even the small business sector is again starting to spend on advertising.
In March, the transport index rose 16.6% compared with March 2010. The number of passengers passing through Bloemfontein airport rose for the sixth successive month and was 10.3% higher in March than in the same month last year. In the same period land transport was 3.2% up and petrol sales 9%.
Better prices and more favourable conditions in the Free State agricultural sector lifted the agricultural index 4.3%. This included a 16.5% rise in the red meat index.
Last year poor prices had placed a damper on the sector, said Professor Johan Willemse, an agricultural economist attached to the University of the Free State.
Not only are meat and maize prices higher this year, but it appears that prospects for a better wheat price have improved.
March vehicle sales (13.9% up) were slightly lower than in recent months, and the overall trade index rose 5.4% y/y.
- Sake24
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