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S. Africa's trade conditions approach desperate levels: survey

Xinhua, January 15, 2016 Adjust font size:

Trade conditions in South Africa are approaching the desperate levels experienced towards the middle of 2009 following the 2008 recession, according to a survey released on Thursday.

The December 2015 seasonally adjusted composite Trade Activity Index (TAI) measured 39 compared to 42 in November 2015, said the survey conducted by the South African Chamber of Commerce and Industry (SACCI).

The December 2014 seasonally adjusted TAI was 17 index points higher than the figure recorded for December 2015.

The TAI annual average for 2015 declined to 47 compared to 50 for 2014.

SACCI economist Richard Downing said low demand as well as lower export volumes reflects a dull economic environment.

"What we do with the trade survey is that we ask people in the trade to give us responses to how they are doing and this is real information of how business is experiencing the trade environment," Downing said while releasing the survey in Johannesburg.

Depressed trade conditions, along with a severe drought, the rapid depreciation of the rand and capital outflows are indicators that South Africa's economy is heading towards recession, economists say.

But South African Finance Minister Pravin Gordhan on Thursday dismissed predictions that a recession was imminent.

Such recession predictions were "alarmist", Gordhan said at a press briefing in Pretoria after a fortnightly cabinet meeting.

"If you look at the recent World Bank report we are growing and not going into recession," the minister said.

But he acknowledged that South Africa's economy is not growing fast enough.

"We are not solving the question of inclusion and marginalization of black businesses," said Gordhan.

The World Bank report, released last August, predicted that if the status quo in the labor market persists, South Africa's real gross domestic product (GDP) will grow by about 3.7 percent per year and real per capita income growth would average 3.1 percent per year between 2015 and 2030.

By comparison, the report shows that if some 5.8 million jobs are created over the next 15 years to absorb the new working age entrants and lower the unemployment rate by three quarters, and if labor productivity and educational attainment improves, real GDP growth could reach 5.4 percent per year, enough to allow income per capita to double in real terms by 2030. Enditem