KZN’s economy hits a peak

2010-08-27 00:00

DESPITE the slow pace of national economic recovery, KwaZulu-Natal’s economy grew by an estimated 4,4% on a seasonally adjusted annualised basis in the second quarter of 2010.

But according to Pietermaritzburg-based economist Clive Coetzee, the province is unlikely to sustain such growth in the final two quarters of 2010.

The figure was boosted mainly by a growth in the transport sector, possibly as a result of the Fifa World Cup.

The estimate is higher than the official national gross domestic product (GDP) figure of 3,2%, released by Statistics South Africa on Tuesday.

The national figure was lower than market expectations — dragged down by the poor performance of the mining sector.

Coetzee warned that KZN’s growth has probably reached its peak, adding that the end of the World Cup, global economic jitters and the recent strike action do not help the province’s prospects.

The general pessimism among business owners and managers does not bode well for the KZN economy, Coetzee said.

As a result, a declining growth trend is expected over the next few quarters.

This is particularly worrying given the fact the 2010 performance would be off a low base, created during the recession of 2009.

“The latest GDP figures are too high to justify a rate cut, but too low to stimulate business investment in the economy. It is also not good news for employment creation.”

Fresh concerns over a secondary global recession have emerged in recent weeks, sparked by poor growth prospects in the UK and U.S. — among other economies.

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