Capital’s economy grows

2009-11-14 00:00

THE Pietermaritzburg economy bounced back from a deep recession — spread over five consecutive quarters — with relatively robust growth during the second quarter of 2009, according to local research focusing on the estimated economic growth rates of the major cities of KZN.

In contrast, the Durban economy experienced two consecutive quarters of negative growth during the first half of 2009.

The estimates have emerged out of working papers compiled by Pietermaritzburg-based economist Clive Coetzee, who is also general manager of the Intergovernmental Relations (IGR) Unit at KZN Treasury.

Interestingly, Coetzee has used local fuel consumption data in order to estimate city and provincial GDP (Gross Domestic Product), after initially conducting statistical work to determine whether a relationship exists between GDP and fuel consumption.

According to Coetzee, Pietermaritzburg experienced an estimated growth rate of about 8,1% year-on-year (annualised) during the second quarter of this year.

The city had previously experienced estimated quarterly growth rates of -11,1% (quarter two — 2008), -9,5% (quarter three — 2008), -3,7% (quarter four — 2008) and -1% (quarter one — 2009).

Coetzee believes that the city’s recovery is sustainable, despite the job losses incurred in recent quarters.

The lower interest rate environment played a major role inPietermaritzburg’s recovery as the Capital city’s economy has a strong retail and consumer-driven component.

Coetzee added that as the provincial capital, the city has benefited from the strong and stable influence of the government.

“Government has been a stable and expanding sector within the [Pietermaritzburg] economy,” Coetzee said.

Other sectors of the city’s economy that have rebounded include financial services and property.

“I am fairly bullish about the city’s economy going forward. This should be a sustainable recovery, although it does depend on interest rates [remaining low].”

According to Coetzee, Durban’s economy has not yet mounted a recovery from the recession.

“Pietermaritzburg’s economy started declining in early 2007, crashing long before Durban, and [Pietermaritzburg] is now in a recovery phase.”

Durban’s estimated quarterly growth rates came in at 8,2% year-on-year (quarter one — 2008), 7,2% (quarter two — 2008), six percent (quarter three — 2008) and 3,7% (quarter four — 2008).

However, the recession clasped a firm grip on Durban this year.

Durban experienced estimated quarterly growth rates of -4,3% during the first quarter of 2009 and -4,4% during the second quarter of 2009.

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