The Eastern Cape economy is on the resurgence according to the latest 2010 fourth quarter figures by economists.co.za. The numbers are a welcome boost for a province which has been hard hit by the deepest recession we have seen in 17 years. Importantly, these figures will do a lot to boost business confidence in the province.
While there are indications that the provincial economy is not out of the woods yet, it is on the road to recovery. As Border-Kei chamber chief, Les Holbrook says, “we can’t sit on a recession forever.”
The economic recovery no doubt bodes well for further economic growth and job creation prospects. The figures reveal that the Eastern Cape is the best performing of the five provinces – other provinces measured include Gauteng, Western Cape, KwaZulu-Natal and the Free State. Economic activity in the province is up 9,9% in the fourth quarter of last year compared with the same period in the previous year.
Province’s forecast the only one to surge
The report notes that while the manufacturing sector has been slow to recover nationally, the Eastern Cape manufacturing index at 7,5% was the only one to indicate a surge. Adding strength to these figures is Volkswagen South Africa’s (VWSA) forecast of further growth of 10% this year in the automotive sector. This is good news if you consider that manufacturing contributed a formidable 7,7% to provincial GDP in 2009 and is largely driven by automotives.
The car-maker says its market share in South Africa also increased by 0.5% from 2009 to 19.9% in 2010. The car manufacturer recorded an impressive 101% increase in production volumes in 2010, making 119,500 cars compared to 59,500 in 2009. The provincial export market is also performing admirably with the provincial barometer stating that road transport has increased substantially, owing to increased exports to the rest of Africa. At 11,8% the Eastern Cape was the best performing province in the transport sub-indices.
VWSA’s exports show off impressive track record
To add weight to these export findings, VWSA says of the 119,500 cars it made in 2010 a remarkable 76,900 were exported compared to 29,200 in 2009. The balance of 42, 600 went to the domestic market compared to 30, 300 in 2009. These exports were driven by global demand for its new Polo. The Polo Vivo achieved 23,297 sales in 2010, firmly establishing the Brand as South Africa’s top selling passenger car.
The report states that it is the coastal provinces that performed better in December attributing this surge in performance on lower economic stress factors, lower inflation and less indebtedness than the interior ones. There is validity in this claim if you consider for example that the Eastern Cape has higher home ownership figures, with 71% of households having fully paid off their homes. VWSA also attributes the upbeat performance figures to low domestic interest rates, increase in disposable income and lower household debt in the province.