Quarry Southern Africa November 2017 - Page 3

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 robyn@interactmedia.co.za QUARRY SA | NOVEMBER 2017 _ 1