Liquidatons on the decline

13 Dec 2013 - by Alan Peat

Liquidations have generally
declined in numbers this
year, and, by all accounts,
the logistics sector “is coping
relatively well with the
weak operating situation”,
according to Luke Doig,
senior economist of Credit
Guarantee Insurance
Corporation
(CGIC).
Stats SA
liquidation
data reveals
that the total
number of
liquidations
decreased
by 9.6%
in the first ten months of
2013 compared with the
first ten months of 2012.
Liquidations of close
corporations decreased by
13.0% and liquidations of
companies decreased by
5.7%.
“We have been at pains
in the past
to highlight
that business
rescue cases
are to a large
extent behind
this apparent
improvement
in the business
environment,” Doig
said. “This was starkly
underscored by the weak
3rd quarter (Q3) gross
domestic product (GDP)
growth figure of 0.7% from
3.2% the previous quarter.”
However, he did point
out that the transport,
storage and communication
sector saw a
Q3 growth
rate of 2.6%
from 1.5% in
Q2. And, for
the first nine
months of the
year, total GDP
growth of 1.8%
was achieved
compared to the same
period last year, while for
transport sector output the
corresponding figure was
again higher at 1.9%.
Further analysis of
the figures showed 10
compulsory and 83
voluntary transport sector
liquidations occurred in the
first ten months
of this year – 93
in total.
“This was
a whole 33%
lower than in
the same period
last year,” Doig
added. “As a proportion
of total company closures,
transport sector casualties
have fallen from 6% in the
first ten months of 2012 to
4.4% so far in 2013.”
However, Doig cautioned
that pressures were
evident throughout the
primary, secondary and
tertiary sectors of the
economy. “This means
that any recovery will be
muted and beset with
challenges arising from
labour relations, weak
demand, cost pressures and
tightening margins.”