Transport, construction power KZN economy
Bloemfontein. – The KwaZulu-Natal economy has seen strong growth over the past 18 months and is still expanding although at a slower pace.
The Sake24 and BoE Private Clients KwaZulu-Natal Barometer rose 10.9% year on year (y/y) in December. The best performer, as usual, was the transport index, which gained 18.2%.
This index has seen double-digit rises for the past 18 months. The growth has been boosted by a 10.9% y/y increase in land transport in particular.
The volume of freight handled at the Richards Bay and Durban ports however increased by 2.5% and, according to Mike Schüssler of Economists.co.za, who compiles the barometer, this is because uncertainty in global markets is putting a damper on imports.
An index one might watch is the province’s construction index, which rose 14.9% y/y.
This is in sharp contrast with the picture in the other provinces, where construction activity collapsed in the past year.
Schüssler said the KwaZulu-Natal increase indicates that the recession in the property market may be on the wane. “But the index is still 30.8% lower than it was three years ago, and there is therefore a lot of catch-up to do.”
The broad trade index, which includes tourism, improved by 8.3% in December compared with the previous year. This is partly owing to the 25.3% increase in vehicle sales over the period.
Activity in the tourism and leisure sector however was only 3.3% up, and fuel sales remained unchanged, despite the price reduction.
“Indications are that domestic holidaymakers spent less in the province and their holidays were shorter than expected,” says Schüssler.
The financial, property and business services sector was 4.2% down on the previous year and 10.5% down on three years ago.
This sector was hard-hit by the recession, but it appears as though property transfers are picking up. In December they were 10% better than in the year before and the number of approved home mortgages rose 7% over the period.
The agricultural index dipped 4.6% y/y, but the picture looks better quarter on quarter (4.9% up).The increase can be attributed to higher prices, which boost production. Production of sugar cane rose 11% y/y.
Government expenditure (11% up y/y) is still high, compared with that in other provinces, but this index also started to slip in the quarter.
“Government is holding back on spending, because it realises that it needs to create a buffer in the event that the likely slowdown in the global economy becomes a reality this year,” says Schüssler.