Tag Archives: Economy

SA economy still faces difficult time ahead

Despite the fact that South Africa’s economy is without a doubt displaying signs of growth, it will continue to deal with unstable times ahead, according to Deputy Finance Minister Nhlanhla Nene.

“There is no room for complacency and in addition we continue to have to deal with a considerable amount of uncertainty during this current period of adjustment throughout the global economy,” he was quoted saying.

During the first quarter of 2011, the local economy expanded by 4.8 percent.

“Whilst this recovery is more robust compared to a year ago in South Africa as well as in almost every other emerging market countries, its fundamentals are certainly not yet sustainable; in addition to being highly dependent on support from expansionary fiscal and monetary policies,” Nene explained.

Deputy Finance Minister Nhlanhla Nene


Skills challenges and education continues to be a major factor that still to be confronted by the Republic in addition to a vibrant economy is necessary to deal with poverty and unemployment.

“Unemployment represents our most significant problem: no more than 13 million South Africans, or 41 percent of the working-age population, currently have regular employment,” revealed the deputy minister.

He conveyed concern around the high level of unemployment among the younger generation at 42 percent. “Even though the economy has recovered, employment opportunities continues to be below its pre-crisis level. Something has to be done.”

The New Growth Path, which intends to generate five million work opportunities over the next 10 years, is projected to generate in excess of a million jobs in infrastructure development and housing, while an additional 500 000 job opportunities would be generated within the agricultural sector and 350 000 in manufacturing. Travel and leisure is aimed towards 225 000 jobs not to mention mining expecting 140 000 opportunities.


The deputy minister pointed out that higher employment in the manufacturing sector, at the same time, will depend upon the successful implementation of the second Industrial Policy Action Plan (IPAP2), which was in addition revealed last year to offer new direction and impetus with regard to South African manufacturing.

The reform of development finance institutions is in addition going ahead.

Nene mentioned that the Path will certainly fail to meet its targets if an environment which is conducive to private-sector growth and business investment is not promoted. “This demands from Government to provide economic stability and help reduce the cost of capital via sound macroeconomic policies.”

The deputy minister acknowledged the role played by the private sugar industry in its initiatives to generate opportunities, for instance offering bursaries for studies in agriculture, sciences and engineering. “These areas are some of the critical skills needed to fuel our sustainable and inclusive economic growth.”

The South African sugar industry provides an annual estimated average direct income of R8 billion, along with direct employment within the sugar industry at approximately 77 000 jobs.

Source: BuaNews


SA Economy grows faster than market expectations

South Africa’s economy grew by a higher-than-expected 4.8% in the first quarter of 2011, led by greater manufacturing activity and in spite of a shrinkage in agriculture as a result of to floods in January and February.

Seasonally adjusted real GDP at market prices for the first quarter of 2011 improved by an annualised rate of 4.8% in comparison to an increase of 4.5% (revised from an increase of 4.4%) in the fourth quarter of 2010, according to Statistics South Africa (Stats SA).

The expected first-quarter GDP growth had been around 4.2%.




Manufacturing contribution

As reported by Stats SA, contributing factors to the economic activity appeared to be the manufacturing sector, which contributed the most to the economy at 2.2%. This sector has a relative size of 15.1% of the overall economy.

The finance, real estate and business services added one percentage point to growth, and then followed by the wholesale, retail, motor trade and accommodation industry.

“All of us were definitely astonished at the number. It’s actually a really good number as well as good showing by the manufacturing sector,” said Standard Bank senior economist Johan Botha.

Economic activity in agriculture, forestry and fishing industries returned negative growth of 2.6% to some extent as a result of a negative contribution by field crops. This could possibly have been as a result of flooding encountered in January and February, said Stats SA GDP manager Kedibone Mabaso.

“Agriculture has been doing very well, however it is very volatile,” said Botha.




Economy ‘gaining traction’

During the first quarter, the seasonally adjusted real annualised value added by the primary, secondary and tertiary sectors recorded gains of 0.5%, 11.1% and 3.7% respectively.

“I believe the economy is gaining traction at this point, and the real question is precisely what the effects will be on interest rates, making it more challenging for the MPC’s [Reserve Bank monetary policy committee’s], for the reason that growth is stronger than what was expected,” said Botha.

“The Reserve Bank may choose to observe an additional bout of strong growth prior to making a call.”

The second quarter GDP numbers are expected in August, a month prior to the MPC’s September meeting. Standard Bank is expecting that the MPC will continue to keep rates as is until early January 2012.

Source: BuaNews


South Africa’s employment rate at a record high

The employment rate in South Africa reached a two-and-a-half year record high in March, based on the Adcorp Employment Index released on 11 April 2011.

A large number of work opportunities became available within all major sectors as total national employment increased by 5.6% last month when compared to February.

“This is definitely the very first time in approximately two-and-a-half years that each and every sector, occupations and employment types revealed positive growth,” said Adcorp’s CEO, Richard Pike.

Unquestionably the transport sector experienced the best employment growth rate with 18.3%. Mining currently employs approximately 316 000 employees, as employment increased by 11.5%.

Manufacturing presently has in excess of 1.4-million employees. Demonstrating excellent recovery coming from a recession, job opportunities within this sector expanded by almost 9.4% from February. It encountered a -3.4% decline in February when compared with January.

Additional record high employment growth rates happened to be observed in the electricity, gas and water supply industries with a combined 13.6%, and agriculture sitting at 11.8%.As much as 89 000 South Africans happen to be doing work in the former, at the same time there are now approximately 10.3-million skilled agricultural and fishery workers in the country.

The formal sector accomplished a 7.3% monthly growth, at the same time employment in the informal sector increased by 2.0%. “This stands out as the first time since January 2006 that the formal sector drew staff out of informal employment,” Pike said.

Employment within the financial sector stands at over 1.6-million plus increased by 3.8% in February. In excess of 1.6-million ply their particular trades in the wholesale and retail industry.

South Africa lost far more than a million jobs as a consequence of the economic recession that endured throughout 2009, nonetheless the March employment rate of growth is surely an signal of shift and progress.

Beneficial to New Growth Plan

This particular employment growth, despite the fact that it is not guaranteed, bodes well with the government’s campaign of lowering the country’s unemployment rate by 10% over the next 10 years. By means of its New Growth Plan, the government is determined to create five million work opportunities within the period.

The government has called on the private sector to play an even more significant function in this particular drive by creating more jobs.

All of the government spheres have already been asked to produce jobs. Adcorp’s February employment index discovered that new government jobs improved by 5.5% in the month. The expansion appeared to be mostly in municipalities and provincial government.

The national unemployment rate currently stands at 24%, after a 1.3% drop in 2010. Statistics South Africa believed that a minimum 13.1-million South Africans were found to be employed by the fourth quarter of 2010.

Short-term employment

Temporary employment showed a 3.7% growth during February. Adcorp remarked that this type of employment in conjunction with contract jobs has grown by 64.1% since 2000.

Long term work opportunities happen to be diminishing as businesses have a preference for temporary or short-term contract employees.

Adcorp maintains the fact that temporary jobs boom is in line with global general trends and “South Africans in spite of everything requires a change in way of thinking surrounding the notions of temporary and permanent employment”.

This particular development could quite possibly put a strain on a large number of South African workers, simply because it confines their participation in the economy and personal growth. Additional complications usually appear when short-term contract employees have to gain access to funding for essentials such as housing.

Source: mediaclubsouthafrica.com


SA a big hit with overseas visitors

South Africa has proved to be more popular with World Cup visitors than previously thought.

Figures from accounting firm, Grant Thornton, show that visitors during the 2010 FIFA tournament were close to 400 000 – a good 27 000 more than the initial estimate made in April.

Overseas visitors are thought to be around the 270 000 mark, with a possible 130 000 African visitors having thronged to South Africa for the event.

Local industries benefit

This is good news for South Africa’s tourism sector, which enjoyed a sizeable chunk of the R38 billion injected into the economy. Foreign visitors spent roughly R30 000 per person.

“What it confirms is that the tourism industry benefitted from significant numbers of additional arrivals,” said Michael Tatalias, CEO of the Southern Africa Tourism Services Association.

Results from South African Tourism’s departure surveys for the June/July tournament were still outstanding. Grant Thornton stats were adjusted to accommodate this.

“The figure has been adjusted to take into consideration the displacement factor of regular tourists who opted not to visit SA during the event, as well as those tourists who were in the country but did not come for the football,” the firm said.

The aviation sector was not left out of the action either, as a staggering number of Africans arrived for the World Cup by plane.

A slight damper was that potential visitors opted not to come to South Africa after their teams were knocked out of the tournament.

However, droves of fans flocked to South Africa as their home teams came close to reaching the final stages. These most notably came from countries like Germany, Netherlands and Spain.

Source: BuaNews, mediaclubsouthafrica.com


SA a top 20 priority global investment destination

South Africa ranks nineteenth in a league table of “top priority host economies” for foreign direct investment (FDI), which was released on Monday as part of the latest ‘World Investment Prospects Survey 2010-2012′ compiled by the United Nations Conference on Trade and Development (Unctad) – hitherto, South Africa had fallen outside the top 20.

The yearly survey is based on responses to a questionnaire from 236 transnational corporations (TNCs) and 116 investment promotion agencies (IPAs).

The survey results showed that there was renewed optimism being expressed by TNCs and IPAs about prospects for FDI in 2010, pointing to a likely recovery from the recession-induced slumps of 2008 and 2009. The results also indicated that there could be further FDI growth in 2011 and 2012

As was the case in 2009, China headed the ranking of the top priority host economies for FDI, followed by India, Brazil, the US and Russia.

It was also the first time that the four major emerging markets (China, India, Brazil and Russia) all ranked among the top five investment destinations.

Unctad noted the continued rise of developing Asia’s relative importance as host for FDI, with six countries among the top 15, as against five in the 2009 survey.

By contrast, the attractiveness of developed countries declined slightly, with only six countries ranking among the top 15, with countries such as the UK and Australia moving down the list – the UK fell to seventh from sixth, while Australia declined from eighth to thirteenth.

The survey results, Unctad said, indicated that the global economic crisis had been less destructive to FDI than had been feared. “While investment budgets, including those for FDI, were squeezed during the crisis, TNCs did not engage in wholesale divestment of their foreign affiliates.”

The crisis did, however, accentuate the shifting in the geographical focus by TNCs from developed to developing and transition economies.

Further, of the leading 20 most promising investor countries nearly one-half were developing and transition economies. China occupied second spot, behind the US, and ahead of Germany, the UK and France – India ranked sixth and Russia ninth.

Developing country TNCs were more optimistic in the short-term about the global business environment and their investment prospects than their developed country counterparts. TNCs from developing countries, especially developing Asia, anticipate a stronger growth of their FDI expenditures from 2009 to 2012 than those from developed countries, especially Europe.

Global FDI inflows slumped by 37% to $1,1-trillion in 2009, having already fallen in 2008 from the record of around $2,1-trillion achieved in 2007.

Unctad reported in July that there were signs of a pick-up in FDI flows since the second quarter of 2009, but that it was not clear that a rebound in FDI was under way. Nevertheless, it was forecasting a “slow recovery” in FDI in 2010 and that the flows would gain momentum in 2011.

The survey found that 43% of respondents intended increasing their international investment expenditures in 2010 as compared with the low levels of 2009, while 58% of respondents predicted increases in 2011 and 2012.

“On the basis of the findings of the survey, as well as other indicators of TNC and FDI activity, Unctad estimates the level of FDI inflows in 2011 to reach a range of $1,3- to $1,5-trillion, rising in 2012 to between $1,6 and $2-trillion,” the survey stated.

FDI growth prospects for the medium term are considered better for the primary and services sectors than for manufacturing.

To download World Investment Prospects Survey 2010-2012 report Click Here

Source: unctad.org, mediaclubsouthafrica.com, engineeringnews.co.za