Johannesburg – We don't have a recession yet, but South Africans need to steel themselves for weaker economic growth.
The May BoE Private Clients and Sake24 Barometer fell 3% quarter-on-quarter (q/q).
"The era of stagnation has dawned," said the compiler of the barometer, Mike Schüssler from Economists.co.za.
Schüssler said stagnation does not refer to lack of economic growth, but growth that is scarcely enough to match population growth.
All the May provincial barometers lost ground, but consumer spending is preventing South Africa falling into recession, he said.
"As long as the consumer is active we will escape a recession, but not stagnation."
Consumers are still spending their money day by day, said Schüssler, but they are buying fewer durable goods like furniture and electrical equipment.
"They are somewhat under pressure, but we know that the petrol price and inflation will fall and that electricity prices will not rise as much as previously expected."
The May Gauteng and KwaZulu-Natal trade indexes, compiled from the latest available figures for vehicle, petrol, retail and wholesale sales, improved 1.9% and 2.1% respectively q/q.
The Western Cape trade index however declined 0.7%, and that of the Eastern Cape 0.6% and the Free State 1.7%.
In the quarter to end-May KwaZulu-Natal fared best. Its barometer was only 1.9% down. But the Free State and Limpopo barometers lost 5% and 5.5% respectively.
Schüssler said it's clear that the inland provinces which depend on the mining sector are struggling more than their coastal counterparts.
"The slowdown in commodity prices is having a heavier impact on the interior. Provinces with mines currently have serious problems."
In May the mining indexes of the Free State and Gauteng, where gold mines still play a major role in the economy, were respectively 4.9% and 4.1% down q/q.
Problems in the platinum sector depressed Limpopo's mining index 10% on a quarterly basis.
The KwaZulu-Natal index was only 1.8% down. Schüssler said the province is protected from the slowdown to some extent because inland coal prices – the prices that Eskom pays for its coal – have not declined as much as global prices.
Schüssler said the motor industry also helped keep the Eastern Cape economy afloat, thanks to motor sales which have remained healthy across the entire country.
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