Manufacturing and agro-processing key to provincial growth

The Gauteng economy has
shown promising signs of
recovery in several sectors in
recent months but concerns
about political infighting and
corruption are playing havoc
with consumer and business
confidence.
Economist Mike Schussler of
economists.co.za has warned
that despite
surprisingly
improved
economic
performance
in the second
quarter of 2016
the outlook
for the third
quarter has been
dampened due to the political
climate.
“Commodity prices have
recovered a little as has the
rand. But, and this is the big
‘but’, the political infighting and
corruption are taking their toll on
confidence. Both consumer and
business confidence is battered.
SA needs leadership not fighting,”
Schussler said.
“The third quarter is under
much pressure again, and I am
worried that if we do not get a
better deal from interest rates
and the taxman, soon we are
going to be
heading down
again.”
Schussler said
2016 was likely
to end with an
overall decline
in the economy
and he would be
surprised if 2017
growth hit more than 1.5%.
“This is a long period of slow
growth or small declines and
may last into 2018 or 2019. This
is a long time that things are
not going to be great but we will
survive and we will do better
again,” Schussler said.
He added that there was
concern about the province’s
economic performance over
the next few quarters but good
rainfall would help agriculture
to provide a boost to the overall
economy.
“Smaller sectors such as hotels,
restaurants and transport have
also had a better month or two,
probably due to imports of maize
and wheat. The financial sector is
still performing well and that is a
surprise,” he said.
Manufacturing and agroprocessing
have been identified
as key sectors in the province’s
Transformation, Modernisation
and Re-industrialisation (TMR)
programme and have the
potential to enhance the economy
and create jobs.
“Food manufacturing is
also looking good so some
food manufacturers could do
okay in Isando and Midrand.
Sandton continues to grow as
does the eastern side of Pretoria
and some parts of downtown
Johannesburg,” he said.
However, manufacturing on
the East Rand was still “in the
doldrums” and had been for so
long that any small improvement
would have a positive impact,
Schussler added.
He said the other major
challenges facing the province
included leadership, maintenance
of roads and electricity as well as
water infrastructure. However,
e-tolls were having a “small”
impact on business because many
motorists were not paying.
He did not expect the Reserve
Bank to raise interest rates again
in 2016 and forecast that the
bank’s next move could be a small
decline early next year.
INSERT & CAPTION
I would be surprised if 2017
growth hit more than 1.5%
– Mike Schussler