The economic stress index increased 11.6% year-on-year, the second consecutive month of doubledigit 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-onyear 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.