SA's economy a fighter

Aug 10 2012 09:09
Vida Booysen

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Bloemfontein - This year South Africa’s economy is engaged in an upward struggle to grow - but there’s no indication of a slipping back into recession.

This is evident from the latest Sake24 provincial barometers, which measure activity levels in five of the country’s provincial economies each month.

In June all five of the provinces were down compared with three months ago. The biggest sliders were the Eastern Cape ( 2.5%), followed by the Western Cape ( 1%).

Matters however appear slightly better in KwaZulu-Natal and the Free State (both 0.6% down), while Gauteng contracted 0.8%.

But there were sectors that did surprisingly well.

"I'm surprised at the manner in which construction in various provinces rebounded, and communications are growing remarkably countrywide," said Economists.co.za economist Mike Schüssler who compiles the exclusive Sake24 provincial barometers.

The communication sub-index is compiled from the number of cellphone and landline calls made across the entire country, as well as data usage on the internet. In June the communications sub-index was 21% up, reflecting both growing cellphone use and 58% growth in data usage.

Schüssler says telecommunications is the one sector on which consumers are spending more.

But in other areas South African consumers would seem to be less active than at the beginning of the year.

The provincial trade indices all came back in the past three months and sales of durable goods like furniture and electrical equipment were weaker.

Vehicle sales however remained in positive territory countrywide, with the Western Cape (14.1% up on the year before) doing best.

“Just keep in mind the role of purchases by vehicle-hire companies and fleet owners.”

In June construction reflected revival in the Free State (14.5% up year-on-year), Gauteng (12%) and the Eastern Cape (21.9%). These provinces’ property sectors are evidently also doing better this year.

In June the country used considerably less electricity than it did last year; declines were recorded in four of the provinces.

Schüssler said although consumers are trying to save because of the high electricity prices, it's the bulk consumers like factories and mines in particular that are using less power.

“We are seeing the negative impact of the struggling global economy on the production side of our economy and exports are under pressure.”

Year-on-year, mining in Gauteng (9.1% down) and in the Free State (7.7% down) is struggling, although on a quarterly basis Gauteng recovered from a sharp first-quarter drop.

Stress factors in the economy probably play the major role in the current downturn, said Schüssler.

The stress index, which reflects interest rates, inflation, unemployment and summonses for debt, climbed in three provinces. It's too soon to say whether the recent lowering of the prime lending rate will help.

“We are moving forward, even if at a snail's pace, and at this stage there is no talk of recession,” said Schüssler.

 - Sake24

For more business news in Afrikaans, go to Sake24.com.

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barometers  |  sa economy



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