Bloemfontein – In recent months a sharp decline in government expenditure in KwaZulu-Natal contributed to slackening growth in the province.
The latest Sake24 and BoE Private Clients barometer for KwaZulu-Natal shows that its economy grew only 1.2% year-on-year (y/y) in September, its weakest improvement since December 2010.
“Although most provinces’ growth indices declined, KwaZulu-Natal seems to be hardest hit,” said Mike Schüssler of Economists.co.za, who compiles the barometers. The overall index went up 3.4% y/y– also the weakest rise in almost a year.
“This can be attributed partly to the continuing uncertainty in the global economy, but the slowdown in expenditure by national, provincial and local government also plays a role,” said Schüssler.
Government makes a 14% contribution to the KwaZulu-Natal economy, but in September the government index fell 10.4% y/y and this was 15.2% lower than three years ago. “It is local government in particular that is struggling to meet its obligations and it is weighed down by the large number of people unable to pay their high municipal accounts.”
The other big loser was the mining index, which shed 8.8% y/y. The construction index (4.9% down y/y) shows that fewer new buildings were being built, but the 6.6% increase in sales of wood for construction and 5.7% in cement sales indicate that extensions and home renovations were continuing.
The transport index still excelled with a 13.7% improvement y/y - its smallest rise since December.
The number of passengers arriving at King Shaka airport was 5.8% up y/y and land transport improved 5.7%.
The trade index was 3.8% up y/y. It seems that wholesale sales in particular are driving growth, with a 5% increase over September last year. Retail sales were 2.1% up and vehicle sales rose 7.2% y/y.
“This indicates that people are buying vehicles despite the worsening economy. Fears that the rand could weaken and push prices up may play a role,” said Schüssler.
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