Durban likely to outstrip national economic growth

Fuelled by exports,
Durban’s economic
growth is likely to
continue to slightly
outstrip national growth in
2014, but negative factors such
as low business confidence levels
and capacity constraints are
hampering any real upswing.
This is the view of KZN
Treasury economist Clive
Coetzee who said he expected
the city and province’s GDP to
average around 2% for 2014
driven by the high demand for
exports moving through the
country’s largest port.
Coetzee said KZN had grown
at a rate of
2.06% in 2013,
slightly above
the national
GDP of 1.9%, a
trend he believes
will continue.
“Growing at 2% there can
only be hope for growth, and the
good news is that we are at the
bottom,” Coetzee said.
“The Durban economy is
linked to what has happened
nationally and internationally,
and the good news is that
things are definitely starting
to get better. We are starting
to see pre-financial growth
rates in traditional economies
of America, Germany, the UK,
France and Canada. Those
economies are all at pre-financial
crisis levels or close,” Coetzee
said.
He said high
demand for
services like
warehousing,
transport
and logistics
was driven by
international exports, although
the province itself had low export
levels.
“When the international
economy performs well, Durban
performs well,” Coetzee said.
However, domestic factors such
as electricity costs, municipal
inefficiencies, insufficient
infrastructure, labour disputes,
and low business confidence
were “bottlenecks” to provincial
growth, he added.
“The bottom line is the whole
economy should be focused
around the facilitation of exports
for KZN – our harbours, roads,
warehouse facilities and import
and export clearing facilities
need to grow and they are not
growing at a fast enough rate.
Supply is running much faster
than demand,” Coetzee said.
He expects Durban to grow
by 2% for the next two to three
years.
According to the lastest KZN
business barometer compiled by
economist Mike Schüssler, the
transport and communication
sector has grown by 7.3%,
although arrivals at King Shaka
International Airport were
down 2.2% year-on-year in
February. Mortgages showed
growth of 1.9%, pointing to
hope for the property sector,
while construction grew 1.3%
and manufacturing declined 1%.
Vehicle sales were up 8.5%.
The KwaZulu-Natal trade
index grew 4.4% supported by
a small increase in retail sales,
but the big boost came from
the 7.1% increase in wholesale,
which showed wholesalers were
building inventory to hedge
against inflation, the report said.
Durban Chamber of Commerce
and Industry CEO Andrew
Layman said Durban’s growth
was parallel to provincial
growth, which revealed that
manufacturing was not faring
well, while agriculture had
shown the best improvement.
“The political stability
reflected by the recent election
will put minds at rest although
there will be concern among
business and investors about the
EFF’s strong showing,” Layman
said.