In an internal report released
to FTW, Luke Doig, senior
manager, investments
and economic services at
Credit Guarantee Insurance
Corporation of Africa,
analysed the latest liquidation
data from SA Statistics.
“No clearer indication of
the extent and impact of the
slowdown in economic activity
is required than by referring
to December 2008’s official
liquidation data that leapt
68.4% year-on-year (y-o-y)
from 206 in 2007 to 347.
“This took 2008’s total 4.7%
up to 3 300 compared to 3 151
recorded in 2007.”
Despite the normal volatility
in these figures, and the fact
that December is traditionally a
sluggish administrative month,
Doig nonetheless felt that this
indicated that the business
operating environment had
deteriorated significantly.
Although he noted that
personal sequestrations had
actually declined marginally in
November – by 2.2% to 273
from 279 in November 2007 –
he also pointed out that, for the
first eleven months of 2008,
the total was 51.5% above that
for the corresponding period
in 2007.
“Individuals’ buying power
has been under pressure for
some time,” he told FTW,
“and retail sales figures are
ample evidence of this – with
real sales down 2.4% for Jan-
November 2008.
“Final Christmas sales are
yet to be released and despite
some respite being offered by
falling fuel prices for one, this
will be reversed in February
2009 when petrol prices may
rise by as much as 55cents/
litre. Thankfully diesel prices
could enjoy a possible 10c/l
reduction and add further
pressure to calls for producers,
manufacturers and retailers to
pass on cost savings.”
Looking at the figures on
a sectoral basis, Doig saw
varied fortunes.
Mining experienced a
121% deterioration as falling
commodity prices dented
earnings and curtailed
exploration. Manufacturing,
he reckoned, with 31% more
closures in 2008, is likely to
face ongoing headwinds
in the year ahead from
sluggish domestic and global
demand – while the ongoing
infrastructural thrust should
provide a buffer to the
construction sector as a
whole despite plummeting
residential activity.
Wholesale and retail trade
may begin to experience better
times by mid-year.
But, Doig stressed, the
logistics (transport) sector is
set for another moribund year
after 68% more closures in
calendar 2008.
The service sectors held
up well and should also start
to benefit from improved
spending power by individuals
come the latter half of 2009.
“Our experience leads us to
expect at least a very difficult
start to the year,” said Doig.
‘Industry set for another moribund year’
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