Kwazulu-Natal Economy Experiences a Further Setback

During July, the general index was 9.6% higher than the corresponding month a year ago but when the quarterly figures are compared, the picture changes as the general index declined to 2.2%. Seven of the nine sectors tracked showed a decline when compared with the previous quarter.

Mike Schüssler, economist of Economist.co.za, who is the compiler of the KwaZulu-Natal Economic Barometer, feels that while the economy has declined in the Province, it is too soon to speak of a double dip recession. The greatest change experienced in the respective indices was in the agricultural sector where a 9.2 % decline was recorded. Schüssler is optimistic that this index will rise as sugar production has increased by 12%. Most other sectors such as manufacturing and textiles declined, making it difficult for these sectors to make any meaningful contribution in reducing the unemployment index of 20.3% said Schüssler.

Dr Nikki Forester, in a survey of the hospitality sector conducted on behalf of PwC found that it would take from three to five years to utilise, the extra capacity created for the 2010 FIFA World Cup. She predicted that 2011 will be a difficult year for the sector and it can only expect a recovery when global tourism starts improving. The level of advertising spends in the media in the Province declined by 8.6% but there are signs that there may be a slight movement in the fixed property sector. Property transfers increased by 7.6% while residential mortgage bonds granted by banks, increased by 16%.

The only sector that showed any growth was in transport and communications which increased by 16% on an annual basis but is showing signs of levelling out. Over a three year period the construction index declined by 16.3%, the largest decline of the nine sectors tracked.
 
Changes in the KwaZulu-Natal Economic Barometer Indices (adjusted on a seasonal basis)

Pieter Rautenbach