BUSINESS: 2011 to Remain a Year Of Cautious Growth
Recent Gauteng Business News
Positive indicators of the South African business confidence index at the end of 2010 were improved vehicle sales, lower inflation and higher precious metal prices.
Vehicle sales improvements are indicative of the recovery in certain sectors of the economy in which consumer access to credit and confidence has improved.
Reduced inflation figures resulted in a decrease in the cost of some consumer items which could assist in alleviating the cash constraints of some consumers.
Precious metal prices are indicative of the global market’s need for tangible investment. This has become more pronounced as international markets continue to struggle to recover.
Liquidations, manufacturing and real finance costs have shown a decline year-on-year. Coface saw an increase in liquidations in the first half of 2010 as the tail-end of the credit crisis played out. In the second half of 2010 liquidation statistics improved however insolvencies raised concern around the smaller companies.
It is expected that liquidation figures should improve going forward into 2011 as the majority of the industries have seen weaker organisations liquidating.
In terms of manufacturing, the 2010 World Cup served to boost the economy in late 2009 and early 2010. Coface South Africa saw a drop off in manufacturing figures after the World Cup as organisations re-adjusted to more natural market conditions.
Many organisations are using the spring board provided from the 2010 Football World Cup to explore new African markets.
The continued pressure on real finance costs is directly linked to consumer confidence. A series of other pressures in the manufacturing market make this one of the most volatile elements of all the South African industries.
These pressures include company consolidations leading to widespread retrenchments in certain sectors. Inflation-based salary increases for 2011 have resulted in lower percentage increases for many employee salaries in comparison to 2010.
Finally, increased electricity and food prices, which are not necessarily taken into account with the inflation estimate, have served to dampen consumer cash flow.
2011 is expected to remain a year of cautious growth in many sectors, with the country’s trading partners such as China, as well as key consumer attitudes such cost vs quality perceptions, being the main drivers of growth.
Business News Sector Tags: Finance| Business| Economy|