KwaZulu-Natal Business Barometer Dec 2014

Unemployment, consumer debt and higher interest rates than a year ago are driving up economic stress in KwaZulu-Natal and affecting economic activity in the private sector. The latest KwaZulu-Natal barometer, as compiled by Mike Schüssler of Economists.co.za, declined 4.4% year-on-year, the biggest drop in 24 months, and was down 6.7% from three years before.

Stress on the up
The economic stress index increased 11.6% year-on-year, the second consecutive month of double-digit growth, and was also up on a month-on-month and quarter-on-quarter basis. The sharp increase was mainly due to unemployment, which increased to 24.1% from 19.9% a year before, and interest rates which were 75 basis points higher in December than the previous year after the Reserve Bank tightened policy twice last year. While inflation in KwaZulu-Natal dropped to 5.3% in December, well within the Reserve Bank's 3% to 6% target band, civil debt cases surged by 17.2% after declining year-on-year for 12 months. The sudden jump in civil debt cases, although it means more work for lawyers, was a strong contributor to economic stress in the short term. 

Economic growth index strong
The surge in the stress index to some extent mitigated the strong performance of the economic growth index, which continued to be strong and increased by 6.7% year-on-year, the most in almost four years. Month-on-month the growth index was up 0.3%, and quarter-on-quarter it increased by 3%. The performance of the growth index shows there is still some hope in the KwaZulu-Natal economy. If unemployment decreased to at least 20% or less there should be a decline in the stress index, but that is unlikely to happen any time soon as joblessness is part of a national structural problem in the South African economy. A decrease in interest rates could also help to lower the stress index, but even with the recent drop in the oil price, which led to a slowdown in inflation, lower borrowing costs are not likely soon.

Click below link to download KZN Business Barometer Dec 2014:
KwaZulu-Natal Business Barometer Dec 2014.docx - 249.8 KB


KwaZulu-Natal Investment Monitor November 2014

Fixed investment in KwaZulu-Natal recovered from the undermining effects of strikes on confidence and shrugged off the warnings of looming power cuts. The total investment index of the latest KwaZulu-Natal investment monitor increased by 2% year-on-year, the best performance in eight months, which included several months of declines in investment. Quarter-on-quarter, the index also grew by 2%.

Transport equipment shows double-digit growth
Transport equipment was the big driver behind investment growth in KwaZulu-Natal in November. The transport index was up 15.8% year-on-year, the most in almost three years, and expanded by 1.6% on the previous quarter. The most likely driver of this growth is the new investment being made by businesses establishing themselves in the Dube tradeport industrial development zone next to the King Shaka International Airport. The trade port was officially opened by President Jacob Zuma early in October and has already attracted over R900 billion rand in private-sector investment. The aim is for the trade port to contribute R5.6 billion to the country’s gross domestic product by 2060.

The development of the trade port should help to boost most categories of transport equipment and should continue to boost fixed investment and the rest of the KwaZulu-Natal economy all through 2015. Investment in land transport equipment increased by 7.4%, boosted by a 75% surge in bus purchases and light commercial vehicles which grew by 8.1%. This shows that some small businesses are experiencing a better economic climate and investing in new vehicles.  Purchases of ships and airplanes was up by 40.3%, showing that businesses are also making expensive investments.

Click below link to download KZN Barometer for November 2014:
KwaZulu-Natal Investment Monitor Nov 2014.docx - 1.4 MB


Click below link to download the Economic Newsletter for Jan 2015:
Jan 2015 Economic Newsletter.pdf - 801.3 KB


Dr Clive Coetzee
General Manager:  Infrastructure Management and Economic Services
KZN Provincial Treasury
Economist (PhD UKZN)
033 897 4538
http://www.kzntreasury.gov.za