Johannesburg – The South African economy is doing better than it did this time last year, but worse than in the first half of 2011.
The Sake24 and BoE Private Clients provincial barometers for September, which measure economic activity in five provinces, showed declines everywhere over the past three months – although each province had different reasons for the reversals.
“We have to take care not to be overly negative about our economy but despite lower unemployment, the positive effect of lower interest rates and consumers' strong willingness to buy, we are now experiencing the most difficult period since the recession,” said Mike Schüssler, director at Economists.co.za and compiler of the barometers.
The winds of the foreign debt crisis are starting to blow towards the South African economy and there are signs of the business environment feeling the pressure, particularly on the growth side of the economy.
“We can see it in the unexpected decline in the mining indices and this will ripple through the manufacturing and the construction sectors, which are both currently performing erratically.”
The Eastern Cape barometer tumbled the fastest of all five provinces. In the past three months it fell 5.6% and it was the only province that also declined year-on-year (y/y) – by 2.8%. The decline owed much to a contracting construction sector (33.1% down y/y).
The Western Cape (8.1% up y/y) and the Free State (9.3% up y/y) fared best among the provinces, but they too fell back over the past three months. In the Free State the construction index (31% down y/y) is looking wretched.
In Gauteng (6.1% up y/y) the mining index began to slide and was 10.2% down on the comparative period last year.
Schüssler said although economic stress factors are less oppressive than a year ago, growth is still not satisfactory, making the business environment challenging.
“Now it is more essential than ever for government to spend on the appropriate things, things that can stimulate growth, and for South African businesspeople to receive the proper support – not necessarily financial, but through the creation of a positive business environment."
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