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Bloemfontein - Had South Africa's economy been a truck, it would have pulled off the road to rest.
Sake24
and BoE Private Clients’ five provincial barometers showed slower
growth in October, and in Gauteng the growth rate declined as much as
3.1% year-on-year (y/y).
Economists.co.za economist Mike Schüssler, who compiled the barometers, said some growth was still evident. However, two of the country's most important provinces, Gauteng and the Western Cape, which together produced almost half of South Africa's gross domestic product (GDP), showed signs of a slowdown in various sectors.
The growth engine is struggling uphill amid unemployment, strikes, the strong rand, a weak global economy, consumers’ high indebtedness and higher municipal tariffs.
One of the most significant trends was that the manufacturing index in most provinces was falling, among other things in the wake of the strikes.
Even where the indices were rising, they were not even close to the highs in the first half of 2008, said Schüssler. This indicates the impact the strong rand and weary global economy had on our export market.
Electricity sales in all provinces except KwaZulu-Natal declined over the past three months. The Free State reflected the biggest drop, with 5.7%. Schüssler said the lower consumption could be ascribed to massive tariff hikes in the past six months – between 18% and 25%.
It would appear, he said, that private consumers and businesses were looking for ways to save electricity so they could maintain their living and operational standards.
He said local governments had increased their average expenditure by 30% this year, and much of this had been funded by higher tariffs for services like water and electricity. Consumers were returning to the shops and retail sales had gone up in all the provinces, although the increases were not as strong in Gauteng and the Free State.
Schüssler said those were also the two provinces with the highest economic stress levels, and factors like high indebtedness and rising unemployment had a negative impact on consumer confidence.
The Western Cape economy was showing slower growth, but nevertheless had some momentum, said Schüssler. All indices in the Western Cape barometer rose in October, except for those of the agricultural and construction sectors.
As in the case of the other provinces, this province’s economy was not generating enough work and unemployment had risen.
In the Eastern Cape an extended drought had taken its toll in the agricultural sector, and the index was 7.2% down on the year before.
KwaZulu-Natal’s construction index fell sharply by 25.3% y/y – a trend also seen in most of the other provinces.
It would probably take another six months for the construction index to turn around, said Schüssler. Approval for large government projects took a long time, while the private sector was now focusing on saving costs – money was not yet available for extensions or new buildings.
Gauteng’s lower growth figure, as well as its weaker performance in the financial, property and business services sector, was however one of the clearest indications that the country's economy was entering a phase of slower growth, said Schüssler. This province had previously been the forerunner of an economic about-turn.
But there is a silver lining: even if our growth has been below average for a few months, we are still growing.- Sake24
For business news in Afrikaans, go to Sake24.com.
For more news on the Sake24/BoE Private Clients barometers, go to www.fin24.com/barometer.
