SA Economy better than Europe
· Malema is less threat than Greeks to SA economy
· Economic growth plus changing demography gives SA the unique opportunity to become more modern
· SA economy still growing in excess of population growth
South African business and investors should not let domestic issues including political confusion, strike action and service delivery issues negatively cloud their outlook –global issues including the Greeks’ economic woes pose far more of a threat.
JP Landman, Political Analyst for BoE Private Clients, told a gathering of high net worth clients in the Cape recently that the SA economy only ‘tripped up” twice in the 17 years since becoming a democracy. It delivered negative per capita income growth in 1998 and in 2009 which were both due to global not local problems. In both cases it was because of global developments and not local factors.
“The 1998 fall was due to the South East Asia contagion and in 2009 SA was negatively affected by the world-wide recession. But we were able to restore growth from -1,7% in 2009 to 2,7% in 2010. The forecast of 3,4% in 2011 is under pressure but growth should still be over 3%.
“Consensus is currently for 4,4% in 2013, but I would not be surprised if this is downgraded due to the problems in the rest of the world including Greece as our traditional trading partners are Europe and the UK.” In that sense he was much more worried about the conditions in Europe than about Julius Malema.
He says figures show average growth in SA since 1994 was 3,3%, which is more than double that of the previous 16 years to 1993 which were an average of 1.55%.
“A balance sheet of the SA economy would include on the asset side, or a factor that drives growth, the strong increase in public sector investment in infrastructure from 4% of GDP in 2000 to 6,5% in 2007 and to 8,4% in 2013.
“Adding to the positives is SA’s increasing relations with the BRIC nations, which are good ‘bed fellows’ in terms of growth, a strong private sector and reasonable productivity growth since 1995.” he said.
His view is supported by economist Mike Schüssler in comments on the latest figures revealed in the BoE Private Clients’ Provincial Barometers.
The barometers, which are independently compiled by Schüssler to track the pulse of five of the country’s largest provincial economies, showed a broad slowdown in growth in all provinces during July.
Despite this however, Schüssler says sentiment is “actually more negative than reflected by the figures” and “there is still growth” despite the tightness in the economy.
An example of this is the transport sector which showed strong growth y/y across all provinces with Gauteng (up 17.4%) and in the Free State (16% up) being particularly strong provinces.
Activity levels in the financial, property and business services indices in four provinces are higher than a year ago, with KwaZulu-Natal showing slight strain (0.6% down y/y).
Across the country there is also an indication that banks have begun to relax their lending criteria for home loans and in all five provinces the number of approved bonds has begun to rise y/y.
