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Johannesburg - The Eastern Cape economy has recorded negligible economic growth over the past three years, largely owing to the deepest global recession for more than 40 years.
This is according to Economists.co.za economist Mike Schüssler, the compiler of the Sake24 and BoE Private Clients provincial barometers.
According to the Eastern Cape barometer, economic activity in the provincial economy for April was 1.8% up on April 2008. It is the sub-sector for financial, property and business services in particular that is still experiencing problems, with April activity levels a massive 30.7% down on three years ago.
Schüssler said many people believed that the South African economy was not doing as well as official figures indicated, so a three-year comparison provided the necessary perspective.
New home loans, a key sub-indicator of business services, contracted a huge 66% in the three years to end-April.
Estate agents, Schüssler said, were simply not seeing the same turnovers.
Besides business services, the construction industry has suffered the most over the past three years, with a 26% contraction.
The Eastern Cape's construction industry will take another three years to reach pre-recession levels.
April’s activity levels in the important manufacturing sector were still 3% lower than 36 months ago, while the recent drought resulted in activity levels in the agricultural sector being only 2.7% up on three years ago.
The recent economic recession was the worst of its kind we will see for a long time, said Schüssler. It was much like the recession in the 1970s.
The only sectors making a significantly larger contribution to the local economy than three years ago are the government and transport sectors.
In the 36 months to end-April government expenditure rose an enormous 35.3%, followed by the transport index’s 24.1%.
Schüssler said this level of state expenditure was unsustainable, but the Eastern Cape could certainly develop into a transport services centre in the foreseeable future.
In terms of the next three years' economic growth, Schüssler points to the Eastern Cape’s volatile economic growth rate.
The Eastern Cape is always an outlier compared with the rest of South Africa’s economic growth, because it is so dependent on the motor industry, said Schüssler. He nevertheless thinks it will take three years for the average Eastern Cape resident to be better off than in 2008.
A delegation led by the department of trade and industry (DTI) expressed optimism about the Eastern Cape’s future ability to drive growth.
Developments in Nelson Mandela Bay will make it easier to attract investors to the city, said Vusi Mweli, director of transport development at the DTI.
According to him, the city's infrastructural developments fit perfectly into the government's plans to attract foreign investors.
- 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.
This is according to Economists.co.za economist Mike Schüssler, the compiler of the Sake24 and BoE Private Clients provincial barometers.
According to the Eastern Cape barometer, economic activity in the provincial economy for April was 1.8% up on April 2008. It is the sub-sector for financial, property and business services in particular that is still experiencing problems, with April activity levels a massive 30.7% down on three years ago.
Schüssler said many people believed that the South African economy was not doing as well as official figures indicated, so a three-year comparison provided the necessary perspective.
New home loans, a key sub-indicator of business services, contracted a huge 66% in the three years to end-April.
Estate agents, Schüssler said, were simply not seeing the same turnovers.
Besides business services, the construction industry has suffered the most over the past three years, with a 26% contraction.
The Eastern Cape's construction industry will take another three years to reach pre-recession levels.
April’s activity levels in the important manufacturing sector were still 3% lower than 36 months ago, while the recent drought resulted in activity levels in the agricultural sector being only 2.7% up on three years ago.
The recent economic recession was the worst of its kind we will see for a long time, said Schüssler. It was much like the recession in the 1970s.
The only sectors making a significantly larger contribution to the local economy than three years ago are the government and transport sectors.
In the 36 months to end-April government expenditure rose an enormous 35.3%, followed by the transport index’s 24.1%.
Schüssler said this level of state expenditure was unsustainable, but the Eastern Cape could certainly develop into a transport services centre in the foreseeable future.
In terms of the next three years' economic growth, Schüssler points to the Eastern Cape’s volatile economic growth rate.
The Eastern Cape is always an outlier compared with the rest of South Africa’s economic growth, because it is so dependent on the motor industry, said Schüssler. He nevertheless thinks it will take three years for the average Eastern Cape resident to be better off than in 2008.
A delegation led by the department of trade and industry (DTI) expressed optimism about the Eastern Cape’s future ability to drive growth.
Developments in Nelson Mandela Bay will make it easier to attract investors to the city, said Vusi Mweli, director of transport development at the DTI.
According to him, the city's infrastructural developments fit perfectly into the government's plans to attract foreign investors.
- 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.
