KwaZulu-Natal Economic Developments (Ezomnotho 2nd Quarter 2011)

EZOMNOTHO

The KwaZulu-Natal Quarterly Economic And Statistical Overview

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TABLE OF CONTENTS

1. INTRODUCTION .........................................................................................1
1.1 About this Publication ..............................................................................................................................1
1.2 Authorship of the publication ..................................................................................................................1
1.3 KwaZulu-Natal at a Glance .......................................................................................................................2
2. GLOBAL ECONOMIC DEVELOPMENTS AND OUTLOOK.................................5
2.1 Recent Global Economic Developments...................................................................................................5
2.2 European debt crisis.................................................................................................................................5
2.2.1 Europe Debt Crisis: Chronology of Debt developments.................................................................6
2.2.2 Implications to South Africa ...........................................................................................................7
2.3 Global economic growth trends...............................................................................................................7
2.3.1 Advanced Economies- Organisation for Economic Co-operation and Development (OECD).........7
2.3.2 Emerging Economies......................................................................................................................9
2.4 Commodities ..........................................................................................................................................11
2.4.1 Brent crude oil..............................................................................................................................12
2.4.2 Food .............................................................................................................................................12
2.4.3 Gold..............................................................................................................................................13
3. DOMESTIC ECONOMIC DEVELOPMENTS...................................................14
3.1 Economic performance in South Africa..................................................................................................14
3.1.1 Quarter-on-quarter Gross Domestic Product (GDP) growth rates ...............................................14
3.1.2 2nd Quarter sectoral drivers of GDP growth..................................................................................14
3.2 Regional growth developments: 2nd quarter 2011..................................................................................16
3.2.1 Quarter-on-quarter GDP growth rates.........................................................................................16
3.2.2 KwaZulu-Natal Quarter-on-quarter sectoral growth trends.........................................................17
4. LABOUR MARKET TRENDS .......................................................................19
4.1 Labour market indicators- South Africa.................................................................................................19
4.1.1 Labour Force and Employment Trends in South Africa ................................................................19
4.1.2 Unemployment trends in South Africa.........................................................................................19
4.2 KwaZulu-Natal Labour Market Indicators ...............................................................................................20
4.2.1 Level of economic activity among the working age population...................................................20
4.2.2 Unemployment in KwaZulu-Natal ................................................................................................21
4.2.3 Provincial employment ................................................................................................................23
4.2.4 Labour Force and Employment ....................................................................................................23
4.2.5 KZN Employment Levels by Sector ...............................................................................................24
4.3. Labour market outlook...........................................................................................................................25
5. EXCHANGE RATE ......................................................................................26
6. INFLATION ...............................................................................................27
6.1 Inflation trends in South Africa ..............................................................................................................27
6.2 Geographical inflation ............................................................................................................................27
7. INTERNATIONAL TRADE ...........................................................................29
7.1 KwaZulu-Natal trade performance, 2010 ...............................................................................................29
8. FOREIGN AND DOMESTIC INVESTMENTDEVELOPMENTS..........................32
8.1.1 Foreign direct investment (FDI) performance in 2010 .................................................................32
8.1.2 Emerging economies....................................................................................................................32
8.1.3 Services ........................................................................................................................................32
8.1.4 Regional FDI flows ........................................................................................................................32
8.2 South Africa domestic investment .........................................................................................................33
8.2.1 GFCF by type ................................................................................................................................35
8.2.2 GFCF by source.............................................................................................................................35
8.3 KwaZulu-Natal investment performance, 1st Quarter 2011....................................................................35
8.3.1 Transport equipment in major slump ..........................................................................................35
8.3.2 Buildings investment coming to a halt .........................................................................................35
8.3.4 Machinery investment still boasts year-on-year growth..............................................................36
8.3.5 ICT equipment investment still on upward trend.........................................................................36
8.4 KwaZulu-Natal, and South African foreign investment projects, 2 nd quarter 2011................................36
9 OTHER ECONOMIC INDICATORS ...............................................................38
9.1 KwaZulu-Natal Port Movements.............................................................................................................38
9.1.1 Volume of Vessels ........................................................................................................................38
9.1.2 Cargo handling (metric tonnes)...................................................................................................38
9.1.3 Container Handling ......................................................................................................................39
9.2 Construction Sector Developments........................................................................................................40
9.2.1 Building Plans - South Africa........................................................................................................40
9.3 Retail Sector Developments ...................................................................................................................40
9.3.1 Retail performance in the 2nd quarter ..........................................................................................40
9.4 Motor sales developments: South Africa ...............................................................................................41
9.4.1 Quarterly change in motor sales ..................................................................................................41
9.4.2 Motor Trade Sales Outlook ..........................................................................................................42
9.5 Liquidations and insolvency ...................................................................................................................42
9.5.1 Liquidations..................................................................................................................................42
9.5.2 Insolvencies..................................................................................................................................43
9.6 Civil Debt ................................................................................................................................................44
9.7 Tourism developments...........................................................................................................................45
9.7.1 International tourism developments ...........................................................................................45
9.7.2 South African Tourism Developments - Tourist Arrivals in South Africa......................................45
9.7.3 KwaZulu-Natal Tourist Arrivals .....................................................................................................46
9.7.4 Tourism Accommodation .............................................................................................................47
9.7.5 Tourism Event Impact Assessment - Splashy Fen Music Festival .................................................48
9.8 Manufacturing Developments................................................................................................................50
9.8.1 Utilisation of production capacity by large enterprises ...............................................................50
9.8.2 Capacity Utilisation by Manufacturing Division ...........................................................................50
9.9 Detailed analysis for the first quarter of the 2011/12 financial year .....................................................51
9.9.1 Total provincial budgets and expenditure....................................................................................51
9.9.2 Social services expenditure..........................................................................................................51
8 REFERENCES.............................................................................................53

LIST OF TABLES

Table 1: World economic growth (%) outlook projections (June vis-�-vis April 2011) ...............................10
Table 2: Annualised Quarter-on-quarter change in GDP (seasonally adjusted) per sector at
constant 2005 prices for South Africa (%).....................................................................................15
Table 3: KZN quarter-on-quarter real GDP (seasonally adjusted) growth rate per sector (%)....................18
Table 4: Unemployment Rates (Official and Expanded) .............................................................................21
Table 5: KZN Quarterly sectoral employment performance.......................................................................24
Table 6: South African international trade by region, 2nd quarter 2011.....................................................31
Table 7: June & July 2011 FDI Projects........................................................................................................36
Table 8: Contribution of each type of retailer to the percentage change in retail trade sales
at constant 2008 prices................................................................................................................41
Table 9: Contribution of each type of activity to motor trade sales for Q2:2011.......................................41
Table 10: Civil cases for debt ........................................................................................................................44
Table 11: Number of civil cases recorded for selected regions ....................................................................44
Table 12: International Tourist Arrivals in South Africa ................................................................................45
Table 13: Income Derived from tourist accommodation - South Africa.......................................................47
Table 14: Hotel occupancy rates for selected regions ..................................................................................47
Table 15: Estimated Economic Impact..........................................................................................................49
Table 16: Utilisation of production capacity by large enterprises in the manufacturing industry
for May 2011 compared with the previous year and the February 2011 .....................................50
Table 17: Utilisation of production capacity by large enterprises in the manufacturing industry................50
Table 18: Provincial Aggregated Budgets and Expenditure as at 30 June 2011............................................51
Table 19: Provincial Social Services Expenditure as at 30 June 2011............................................................51
Table 20: Provincial Health Expenditure as at 30 June 2011 ........................................................................52
Table 21: Provincial Social Development Expenditure as at 30 June 2011 ...................................................52

LIST OF FIGURES

Figure 1: Growth trends in sovereign indebted countries (quarter-on-quarter) ..........................................6
Figure 2: OECD 3rd quarter and 4th quarter growth trends ............................................................................7
Figure 3: Growth trends in major advanced countries (quarter-on-quarter) ...............................................9
Figure 4: Growth trends in major emerging countries (quarter-on-quarter)..............................................10
Figure 5: Weekly moving averages crude oil prices (US$) - (January 2008- August 2011)..........................12
Figure 6: IMF Food Index (Jan 2010-July 2011)...........................................................................................13
Figure 7: Global Futures markets-Price of gold and platinum (US$) - (March 2009 - February 2011) .......13
Figure 8: Annualised and seasonally adjusted quarterly growth in GDP in South Africa (%)......................14
Figure 9: KZN annualised quarterly real GDP (seasonally adjusted) growth rate
(1st Quarter 2008 - 1st Quarter 2011).............................................................................................16
Figure 10: 2nd Quarter 2011 national and regional GDP (seasonally adjusted) quarter-on-quarter
growth rates (%) ...........................................................................................................................17
Figure 11: Employment trends in South Africa (2nd quarter of 2008 to 2nd quarter of 2011) ........................19
Figure 12: Trends in South African unemployment rate (%) - (2nd quarter of 2008 to
2nd quarter of 2011) .....................................................................................................................20
Figure 13: Composition of working age population......................................................................................20
Figure 14: Trends in comparative unemployment rates (2nd quarter 2008 to 2nd quarter 2011)...................21
Figure 15: Unemployed and discouraged in KZN (3rd quarter 2009 to 2nd quarter 2011) ..............................22
Figure 16: Comparison of strict and broad unemployment rates for SA and KZN ........................................22
Figure 17: Comparative Employment (2nd quarter 2008 to 1st quarter 2011)................................................23
Figure 18: Comparison of the broad labour force and employment growth rates .......................................24
Figure 19: Sectoral distribution of employment (absolute level)..................................................................24
Figure 20: Quarterly and annual employment changes per sector ..............................................................25
Figure 21: Monthly nominal exchange rate trends in South Africa (Jan 2009 - Jul 2011) ............................26
Figure 22: Trends in South African year-on-year inflation (January 2009-January2011) .............................27
Figure 23: Geographical Headline Inflation (%): (May - June 2011) .............................................................28
Figure 24: Growth (Annual % change) in volume of world merchandise trade and GDP, 2000-11a,............29
Figure 25: South African exports by region, 2nd quarter 2011.......................................................................30
Figure 26: South African imports by region, 2nd quarter 2011 .....................................................................30
Figure 27: Quarterly growth in gross fixed capital formation by economic sector (SAA*),
Q1:2010--Q1:2011 ......................................................................................................................33
Figure 28: Quarterly growth in gross fixed capital formation by investment type (SAA*),
Q1:2010--Q1:2011 ......................................................................................................................34
Figure 29: Quarterly growth in gross fixed capital formation by source (SAA*), Q1:2010--Q4:2010 ..........34
Figure 30: Total Number of Vessels for the 2nd quarter 2011 ........................................................................38
Figure 31: Total Cargo Handled (metric tonnes) ...........................................................................................39
Figure 32: Total Number of Containers Handled...........................................................................................39
Figure 33: Yearly trends in motor trade sales ...............................................................................................42
Figure 34: Number of liquidations in South Africa (Jan 2008 - June 2011) ..................................................42
Figure 35: Insolvency trend in South Africa (Jan 2008 - May 2011) .............................................................43
Figure 36: Total Passenger Movements at South Africa's Busiest Airports ...................................................46
Figure 37: Spectator Experience Rating (Source: TKZN, 2011)......................................................................49

1. Introduction

1.1 About this publication

The publication aims to present economic trends for the province to our respective stakeholders and policy makers. Notably, the publication provides detailed statistics on Gross Domestic Product (GDP), employment, inflation, foreign and domestic investment and international trade. Furthermore, the publication highlights developments in the South African and the provincial economies with emphasis on priority sectors in KwaZulu-Natal (KZN) Province.

The main data sources used are Statistics South Africa (Stats SA) and the Reserve Bank (SARB). Other data sources used in this report are Quantec, Global Insight, Naamsa, and Department of Trade and Industry, the National Treasury, and the Financial Times.

1.2 Authorship of the publication

Ezomnotho is a collaborative effort by the KwaZulu-Natal Department of Economic Development and Tourism (KZNDEDT), Economic Planning Programme; KwaZulu-Natal Provincial Treasury, Macro-Economic Analysis Unit; and Trade and Investment KwaZulu-Natal (TIKZN).

The Economic Planning Programme is critical to enhance efficiency and effectiveness of the KZNDEDT. This is mainly through facilitation and promotion of economic development policies, strategies and programmes. The programme is made up of four sub-programmes; Policy and Planning, Research and Development, Knowledge Management, and Monitoring and Evaluation.

Its purpose is pivoted around the following:
� Provision of economic and investment opportunity information to various stakeholders.
� Provision of leadership and guidance in the development of provincial economic policies and strategies.
� Monitoring the implementation of economic policies and strategies, and periodically evaluating them with a view to determining their effectiveness.
� Providing management with information on which strategic decision making processes are based to enhance the overall efficiency and effectiveness of the Department.

The purpose of the KZN Treasury's Macro-Economic Analysis Unit is to determine and evaluate economic parameters and socio-economic imperatives within a provincial, local, and national macro-economic context. It also provides the KwaZulu-Natal Treasury and Executive with sound statistical information for decisions on the Medium Term Expenditure Framework (MTEF) and budget framework allocations.

TIKZN is a provincial trade and investment promotion agency, developed to promote the province of KwaZulu-Natal (KZN) as an investment destination. It facilitates trade by assisting local companies to identify markets and export their products. Part of TIKZN's strategic objectives is strengthening the organisation's knowledge management capabilities, through production and dissemination of new knowledge outputs, and development of investment packages for potential domestic and international investments by means of packaging sector opportunities.

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