Quarterly Economic Report: Western Cape Economic Growth Shows Improvement
Media Statement by Alan Winde, Minister of Finance, Economic Development and Tourism
Today the Bureau for Economic Research (BER) released the second quarterly economic report on the Western Cape economy, as commissioned by the Western Cape Government.
You can download the full BER document.
The report is a review of the current state and future prospects of the Western Cape economy.
According to the report's findings, after contracting by 1.3% during 2009, economic activity in the Western Cape grew by 3.1% during 2010. This is higher than the national economy, which only grew at 2.9% during the same period.
This trend is expected to continue with the Western Cape's GDP growth for 2011, which is likely to be higher than that recorded nationally. Estimates for 2011 suggest that the Western Cape should continue to outperform the national economy, with growth likely coming from the retail and financial services sectors.
Growth in the Western Cape economy was boosted by increased activity in the manufacturing (5%), finance (3.6%) and retail (3.3%) sectors.
Business confidence in the Western Cape fell to 45 index points from 49 during the first quarter of 2012, in line with national trends. However, the drop Western Cape confidence was less pronounced, resulting in confidence in the province being higher than that of South Africa. Much of this difference can be explained by significantly higher confidence amongst Western Cape manufacturers than is the case nationally.
National manufacturing confidence fell sharply during the first quarter of 2012, as domestic demand disappointed. However, confidence amongst Western Cape manufacturers rose to 58% in the second quarter of 2012, from 47% during the first quarter of 2012. The main reason for the increase in provincial manufacturing confidence is as a result of domestic demand and production, which accelerated during the quarter while foreign demand slowed.
Wholesaler confidence in the Western Cape registered a significant increase, rising by 20 index points to reach 58 during the second quarter of 2012.
The Western Cape economy created 5 000 jobs during the first quarter of 2012. The recorded gains in employment remain modest when compared to the growth in the labour force (those willing to participate in employment). Unemployment in the Western Cape therefore remains too high at 22.8%, but is still significantly lower than the national unemployment rate of 25.2%.
Looking forward, continued uncertainty in the Eurozone is likely to exacerbate the current economic situation of slowing local demand. The forecast of a mild recession in the Eurozone for 2012 will impact on Western Cape exports as this remains an important destination for Western Cape produced goods, with around 40% of the province's exports going to the European Union. This will likely mean that the Western Cape's GDP for 2012 is likely to be lower than what was recorded during 2011, with significant downside risks stemming from adverse global economic conditions.
The review of our economy shows that we are moving in the right direction. We have made many gains - we have significantly higher business, wholesale and manufacturing confidence than has been recorded nationally. The same goes for our economic growth. However, we still have some way to go. We will also have to weather the storms of international financial crises.
The Western Cape Government believes that the creation of growth and jobs is central to ensuring that citizens of our province are able to live better lives. We remain steadfastly committed to achieving this objective, in partnership with all sectors of our society.
In April this year, we launched the Western Cape Economic Development Partnership (EDP), signalling a new era for our economy. The EDP has been tasked with inspiring inclusive, job-creating growth in our region. Its first goal will be to devise a long-term vision and strategy for the province's economy, and simultaneously, to devise work opportunity programmes that will create jobs in the short term. Through the EDP, we will co-create a Western Cape that is a better place to invest, to do business, get a job and earn a living, for everyone.
Phumzile Van Damme
Spokesperson to Minister Winde
Cell: 084 483 2660