Bloemfontein – Increased government expenditure contributed
to the KwaZulu-Natal economy not contracting in May.
The Sake24 and BoE Private Clients KwaZulu-Natal Barometer
shows that the province's economy grew 3.3% year-on-year (y/y) in May, but on a
quarterly basis the growth index was only 0.4% up.
The slowdown in the province's economic growth repeats the
trend seen during the winter months last year as well. By the end of 2011 the
tempo of recovery had begun to rise.
"This year KwaZulu-Natal will probably experience a
similar turnaround, but the poor global economic prospects could aggravate
matters," said Mike Schüssler, who compiles the KwaZulu-Natal barometer.
Expenditure by the national, provincial and municipal
authorities contributes 14% to the provincial economy. Y/y government spending
rose 7.8% after an increase of only 1.2% in March.
Schüssler said expenditure programmes seem to have resumed –
to the benefit of the local economy.
In May consumers were the other prop of the provincial
economy and the trade index showed strong 7.2% growth y/y. This includes a good
13% rise in vehicle sales, an improvement on the single-digit growth of recent
months.
In May the province's transport and communications index
performed best of all the sectors, with a rise of 10.1% compared with the year
before and 40.3% three years before.
The big increase is attributable to the countrywide surge in
communications activity.
The ports handled only 3.7% more freight.
"It seems that imports still play a big role, but
exports are starting to decline," said Schüssler.
The province's manufacturing index lifted only 0.8% y/y, its
poorest growth in eight months.
There is concern about the struggling financial, property
and business services index, which fell 6.3% in May. The province's property
sector is still battling to keep momentum and property transfers were 0.2% down
on the year before.
It seems to be getting more difficult to do business in the
province, with the economic stress index having risen for the second successive
month.
"As consumer expenditure slows down, the KwaZulu-Natal
economy will have to contend with a couple of serious challenges,"
Schüssler warned.
- Sake24
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