KZN now in deep recession

2009-06-22 00:00

THE latest statistics on the provincial economy have all but confirmed what local businesspeople, their employees and the recently retrenched masses have suspected for some time — KZN is in a recession.

The province almost certainly entered a deep recession in April this year and all indications are that the depressed economic conditions will persist over the next six months.

According to economist Clive Coet­zee, the estimated provincial growth figure for the first quarter of 2009 plummeted -9,37% quarter-on-quarter in a three-month period characterised by massive job cuts in KZN — to the tune of 117 000 lost jobs.

He believes that the first quarter will be followed by another quarter of negative growth.

The two consecutive quarters of negative growth registered by the provincial economy will confirm that KZN is in a recession.

South Africa entered its first recession in 17 years in the first quarter of 2009 as the GDP (gross domestic product) plunged -6,4% (q-q).

The first quarter of 2009 in KZN was characterised by contractions in wholesale and retail trade, hospitality, manufacturing, transport, finance, real estate and agriculture.

Coetzee said the province’s manufacturing capacity is experiencing irreparable harm.

“Manufacturing is the first to go bust and the last to come out of the recession. We’ve definitely lost a lot of capacity. I cannot see the downward trend stopping. The sector has some fundamental problems. [Cutting] interest rates won’t solve the problem. We’re unproductive … and the cost of doing business is too high.”

Coetzee noted that the shocking performance of the provincial economy during the first three months of this year was partially as a result of seasonal factors.

The final quarter of 2008 was characterised by robust performances by a number of sectors that traditionally cash-in toward the end of the year.

Buoyed by the year-end “silly season boom”, retail, wholesale, hospitality and transport all performed well in quarter four of 2008.

The agriculture sector also registered strong growth late last year.

Looking at the year-on-year provincial growth statistics, which eliminates these seasonal and cyclical factors, the provincial economy probably recorded a growth rate of -1,62% (y-y) during the first quarter of this year in comparison with the -9,37% (q-q) figure.

In any event, there is no doubt that the province is heading for a deeper and more drawn-out recession than previously anticipated.

kavith@witness.co.za

 

KZN is arguably the hardest hit province in the country, having shed a staggering number of jobs during the first quarter of 2009.

According to Statistics South Africa, the total number of employed people in KZN dropped by 117 000 during the first three months of this year (Q1 2009), with the province’s trade and manufacturing sectors suffering tremendous losses.

The 117 000 figure of lost jobs represents more than half the national figure of 208 000.

The official unemployment rate in KZN shot up from 20,8% at the end of 2008 to 22,6% in the first quarter of 2009.

The number of people employed in KZN’s trade sector dropped by a massive 79 000, while, manufacturing in the province shed 11 000 jobs during the quarter.

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