- Acknowledgement: KZN Department of the Treasury, KZN Department of Economic Development, Tourism and Environmental Affairs, Trade and Investment KwaZulu-Natal

KwaZulu-Natal’s economy is under strain due to a lack of growth in the two biggest sectors, manufacturing and finance, showing that the economic slump is still broadbased.  The latest KwaZulu-Natal barometer, as compiled by Mike Schüssler of Economists.co.za, declined 2.4% year-on-year, the most in 13 months, as increased economic stress eroded the effect of the little growth the economy has shown.

Economic stress on the rise

The growth index was up 3.3% year-on-year, 1.3% month-on-month and 2.3% on a quarter ago, boosted by transport and communications in particular.  Given these growth numbers, the KwaZulu-Natal barometer could have been very positive if it was not for the increase in economic stress. The stress index, which reflects factors like unemployment, inflation and interest rates, was up 5.8% on a year ago, the most since last August, and also grew on a month-on-month and quarteron-quarter basis. Compared with three years ago, economic stress is 10.8% higher. Growth in KwaZulu- Natal could run into serious problems if the stress index continues to grow like this. The increase in the stress index was driven by the rise in unemployment to 24.1%. While inflation in the province has come down slightly to 6.2% from 6.3%, it is still outside the Reserve Bank’s 3% to 6% target range and after the 75 basis points of interest rate increases this year, the borrowing cost is higher than 12 months ago. 

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