KZN’s GDP position declining

2008-04-29 00:00

KwaZulu-Natal’s contribution to the national Gross Domestic Product (GDP) has been steadily declining over the past few years and it is likely that the province is losing out to more rapidly growing provincial economies such as the Western Cape and Limpopo.

According to the latest available statistics, KZN’s contribution to GDP came in at 16,3% in 2006, down half a percent from 16,8% in 1995.

In contrast, Limpopo’s contribution toward GDP has shot up from two percent in 1995 to 4,6% in 2006, largely as a result of a boost from its mining sector.

Gauteng remains the number one contributor to GDP at 39,6%, while the Western Cape is ranked third at 14,6%.

The gap between KZN and the Western Cape appears to be narrowing steadily.

KZN has, however, continued to post economic growth rate figures that are in line with the national GDP figures.

Gauteng and the Western Cape have led the way in recent years, posting economic growth rates of about six percent in 2006, with KZN placed third at 5,3% in the same year.

Economist at the University of KwaZulu-Natal Clive Coetzee said the trend is concerning, given the fact that KZN possesses two critical ports and an equally vital road network.

Although the province remains in top spot in relation to contribution to total agriculture output, this figure has also declined from 30% in 1998 to 25,8% in 2006.

KZN’s contribution to construction output is now 14% of the national total, down four percent from 1995, while its contribution to wholesale and retail remained steady at 16,2%. Interestingly, though, the Western Cape’s contribution to wholesale and retail output grew from 14,6% in 1995 to 18% in 2006.

Two sectors in which KZN has performed well in relation to contribution levels are finance, real estate and business activities, as well as manufacturing.

KZN’s contribution to finance, real estate and business activities’ output increased to 14% in 2006, in contrast to the Western Cape’s contribution to the same sector having declined by one percent to 20% in 2006.

However, the upswing in manufacturing in KZN in recent years is unlikely to continue, given the electricity crisis.

Coetzee said the Western Cape generally possesses a favourable image in the eyes of investors, entrepreneurs and big business role-players.

He added that KZN is also plagued by the loss of skilled professionals to other provinces, particularly Gauteng and the Western Cape. He said he expected the softening in KZN’s contribution to the national GDP to continue for the next "year or so".

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