Free State and Gauteng catch up

Johannesburg - The Eastern and Western Cape economies may have been the first ones to turn around, but the Free State and Gauteng have now caught up and finally shaken off the recession.
 
The latest Sake24 and BoE Private Clients’ provincial barometers show that these four provinces are well on the way to recovery.
 
All four provincial barometers, which are compiled by Economists.co.za economist Mike Schüssler, grew in March on an annualised basis.
 
Though the Western Cape and Free State economic growth indices fell on an annualised basis, they nevertheless showed growth of 5.7% and 3.3% respectively on a three-month basis.
 
"Gauteng took longest to climb out of the recession, but even this province is now on the recovery path," Economists.co.za economist Gillian Findlay said.
 
"The two coastal provinces that the barometers look at started recovering first; the inland provinces took longer to turn around.
 
"The Eastern Cape’s manufacturing sector is closely related to motor vehicle sales, and since motor vehicle sales was one of the first sections of the retail sector to start recovering, this helped the Eastern Cape a great deal."
 
Motor sales in April rose by more than 35% on an annualised basis. This helped ensure that activity levels in the Eastern Cape’s manufacturing sector were 9% higher than last year.
 
The Eastern Cape construction sector has also turned around already, with a year-on-year increase of 6,4%, but in the Western Cape this sector still looks bleak, with a 29% decline on an annualised basis.
 
However, this could be associated with good news rather than bad. Findlay said the reason for the drop was that the province’s building work for 2010 Fifa World Cup infrastructure - such as Green Point stadium in Cape Town - had been completed in time and ahead of most of the other provinces.
 
"Since these were large projects, especially in relation to the Western Cape economy, their influence would have been far greater than in Gauteng," she said.
 
Economic stress is down in all four provinces. The barometers’ economic stress indices, which measure negative factors like interest rates, inflation and unemployment, were between 3% and 7% lower on an annualised basis in all the provinces. This means that pressure on businesses is gradually starting to ease, and that it is slowly but surely becoming easier to do business.
 
Economists don’t expect interest rates to rise soon again. That will allow market conditions to improve further.
 
Findlay said that the influence of the World Cup soccer tournament must also be watched.
"Overall the tournament will no doubt have a positive influence, but I’m not as optimistic as some other people.
 
"We need foreigners coming here and helping the economy. If it’s left to South Africans to buy all the tickets, that money will merely be taken away from other parts of the economy."
 
 -  Sake24.com
 
Read more about the individual provinces in Sake24 or at www.sake24.com.