The drop in the fuel price, after the cost of Brent crude oil fell to the lowest in almost six years, drove down
and boosted consumer confidence, helping the KwaZuluNatal barometer to increase for the first time in 11 months. While the latest barometer, as compiled by Mike Schüssler of Economists.co.za, only grew by 0.9% year-onyear, the increase showed some hope in the provincial economy.
Month-on-month the barometer was down by 0.3% and quarteron-quarter it was up by 4.2% Cheaper Fuel Decreases Economic Stress.The main reason for the increase in the barometer was a decrease in inflation due to cheaper fuel, which meant less economic stress.
Strong growth in government expenditure also boosted the barometer. The economic stress
index, which measures factors like inflation, interest rates and unemployment, rose 4.4%, the smallest growth in six months and decreased on a month-on-month and quarter-on-quarter basis. Inflation slowed for the whole of South Africa and in KwaZuluNatal the rate dropped to 3.7% in February, well below the midpoint of the Reserve Bank’s 3% to 6% target range.
Growth Positive Short-Term The lower fuel price also put a lot of money back into the pockets of consumers. That meant some sectors, which are largely consumer-driven and very dependent on confidence levels, like retail and property, contributed to support the overall barometer while traditional heavyhauling sectors in the barometer, like mining and manufacturing, shrank. The KwaZulu-Natal growth index was up 5.3% year-onyear. However, since February the fuel price has started to rebound and the positive effect in the lower prices will, to a large extent, be reversed in coming months, the negative effect will also eventually flow through to the consumer, and this will in turn have an adverse effect on the provincial economy and the barometer.

Compiled by Mike Schüssler of
Economists.co.za