COMMENT
Cautious optimism as SA
exits technical recession
T
he year 2017 has certainly been
an eventful year for South Africa.
Between the introduction — and
subsequent suspension — of the new
Mining Charter and the ongoing fallout from
the Gupta family businesses (oh, KPMG, how far
you have fallen), there certainly has been a lot
to keep us occupied. There have also been a lot
of negative and pessimistic opinions expressed
regarding the future of the country.
We would do well to remember that even with
everything that is happening, it is not all bad news.
After entering a technical recession earlier
this year, following two consecutive quarters
of negative growth, the South African economy
grew by around 2.5% in the second quarter of
2017, and formally exited the recession.
The second quarter was better for all sectors
of the economy except the construction sector,
which was the only sector aside from government
services to show negative GDP growth in this
quarter. Although the construction GDP decline of
0.5% in the second quarter was marginally better
than the 0.8% decline in the first quarter, this
was not enough to escape the downward trend
in construction GDP figures over the past two to
three years.
However, it’s not all bad news. According to
renowned economist Dr Roelof Botha, despite the
low levels of business and consumer confidence
in the second quarter, which were primarily
influenced by political shocks such as the firing
of Finance Minister Pravin Gordhan as part of the
cabinet reshuffle by President Jacob Zuma, there
should be a return to a positive trend within the
next two quarters.
Among his many responsibilities, Dr Botha
is responsible for compiling the Afrimat
Construction Index: a composite index of
the level of activity within the building and
construction sectors and calculated from nine
different constituent indicators, including the
FNB/BER building confidence index.
Dr Botha points out that real retail trade sales
actually reached a record high in the second
quarter, as South Africans realised that a
technical recession is not as bad as some make
it sound, particularly when you realise that
South Africa’s GDP actually grew year-on-year
in the first quarter of 2017, albeit not by much.
Dr Botha also says that the ANC electoral
conference is almost certain to result in more
policy certainty, which will contribute to
recovery within the construction sector. And as
the municipalities that underwent changes in
the last municipal elections find their feet, he
expects this to also potentially start having a
positive effect on the sector.
Between this optimistic news and the
suspension of the controversial new Mining
Charter, at least for the time being, the outlook
for South Africa’s mining and construction
sectors seems positive. As we move towards the
end of what has been an extremely volatile year
for our country, this is a good outlook to have,
and there are certainly worse ways to approach a
new year than with cautious optimism. n
Robyn Grimsley - Editor
[email protected]
QUARRY SA | NOVEMBER 2017 _ 1