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Bloemfontein – If global markets sneeze, even the Free State catches cold. The current uncertainty and volatility making investments bankers and especially politicians sweat across the globe is contributing to declines in the local mining, agriculture and construction sectors.
The Sake24 and BoE Private Clients Free State Barometer for September may well still be 9.6% up year-on-year (y/y), but in the past three months slid 3% back. Indeed, all indices measuring economic activity in the province other than trade declined in the past three months.
According to Economists.co.za economist Mike Schüssler, who compiles the Free State barometer, the province is showing greater resilience than others to onslaughts like inflationary pressure and shrinking growth.
“The Free State trade sector (6.9% up y/y) is still doing surprisingly well and indications are that consumers have not left the scene,” said Schüssler, adding however that there is some concern about how the consumer side of the economy will retain its momentum when the pinch comes.
Vehicle sales in the province are still rising, showing 25.8% growth y/y in September. This was higher than the 17.2% in August and 16.6% in July.
Other than in other provinces, the government index (10.7% up) is still rising in the Free State. Schüssler warns however that the debt problems of local authorities contribute in particular to less money being available to tackle infrastructure projects.
“The artillery used by the government during the recession to stimulate spending has now been exhausted.”
In September the transport index rose 15% y/y, but it did not achieve last year’s highs and is again at about its January level.
Land transport was 5.5% up y/y and Schüssler reckons the growing mutual trade between South Africa and the rest of Africa could still see the sector perform.
The construction sector in the Free State is still struggling and dropped 31% y/y in September. This index has been falling since February and, according to Schüssler, the declining trend will persist for some months.
The September Free State mining index was 10.2% down y/y, its largest decline so far this year.
“Despite higher resources prices production fell, especially gold production, which was 22.6% down. The instability in global markets seems to be playing a role in this decline,” Schüssler said.
- 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.
