SA economy 'evaporating'

[lion_fish]

http://www.fin24.com/articles/default/display_article.aspx?Nav=ns&ArticleID=1518-25_2363737

SA economy 'evaporating'
Jul 24 2008 6:25PM
Troye Lund
Johannesburg - The groundswell of confidence in the SA economy during the last five years had been wiped out, almost as if we were living in another country.
This is the startling conclusion of the Market Sentiment Index (MSI), an economic barometer which is conducted by marketing and social insights company, TNS Surveys. The surveys poll SA's metropolitan areas.

The index dropped another 18 points in June - its second consecutive drop of this magnitude - to 109 points from 127 points in the first quarter of 2008. June's decline also represents the index?s lowest ebb since 2002. By way of comparison, the index stood at 140 points in June 2007.

"The drop of 18 points is the largest ever drop in the index since the MSI has been tracked (May 2002) and the combined drop of 36 points over the last two readings in the fastest fall ever recorded," said Neill Higgs of TNS Surveys.

"What is even more significant is that at the end of November 2007, the index was standing very close to its all-time high of 147," he said.

"This means that the last six months has seen all the gains made in the last five years - in what is essentially a barometer of the confidence people have in the economy - wiped out," Higgs said.

High food and fuel inflation, as well as rising interest rates, were key contributors to feelings of negativity.

Other research conducted by TNS Research Surveys during the first six months of 2008 showed that January's load-shedding not only affected two-thirds of people financially, but it was also perceived to have a negative effect on the economy.

"In addition, we see President Mbeki's approval rating continuing to drop quite sharply," said Higgs who added there were also serious concerns over the prospect of Jacob Zuma as a future leader.

"Add to that xenophobic violence, the disastrous elections in Zimbabwe and perceptions around crime: it is unlikely that the index will recover in the short term," said Higgs.

Almost all components of the index showed declines in February, with the largest being:


serious concerns about current business conditions (-26 points);
serious concerns about people's personal current economic circumstances (-19 points);
an expectation that people's personal economic circumstances will be much worse in six months' time (-15 points); and
a continuing increase in pessimism in terms how people are feeling about business conditions in six months' time (-14 points).
Large drops were recorded for all race groups. However, the figures for whites and Indians/Asians reached new all-time lows.

- Fin24.com

 

[Fudzy]

Unfortunately we seem to follow the trends of US when it comes to our economy.

 

[PeterCH]

Except the US has competent people in charge of the economy (debatable) who
appear to have some accountability. In SA, there is no accountability or responsibility,
judging by the f-ups which resulted in petrol, electricity and water shortages which
are seriously curtailing the growth of the economy.

 

[Fudzy]

Except the US has competent people in charge of the economy (debatable) who
appear to have some accountability. In SA, there is no accountability or responsibility,
judging by the f-ups which resulted in petrol, electricity and water shortages which
are seriously curtailing the growth of the economy.

How many of those problems are we currently facing? The fact that it didn't snowball into total anarchy like some nay sayers predicted gives me some faith that things are getting better.

 

[jambai]

How many of those problems are we currently facing? The fact that it didn't snowball into total anarchy like some nay sayers predicted gives me some faith that things are getting better.

I tend to agree with you but with skills exodus what shocks are we still in for due to its lag affect.It took eskom five years to see effects of bad decisions.America will recover an they are coming off high base.

 

[Rozier]

How many of those problems are we currently facing? The fact that it didn't snowball into total anarchy like some nay sayers predicted gives me some faith that things are getting better.

I hope you are not holding your breath.

 

[Fudzy]

I tend to agree with you but with skills exodus what shocks are we still in for due to its lag affect.It took eskom five years to see effects of bad decisions.America will recover an they are coming off high base.

Agreed, the skill exodus is a major worry.

I hope you are not holding your breath.

I'm not Look, you'd have to be a blinkered fool to stay in a country where your quality of life and future look grim but there are still alot of people out there who have it pretty good and appreciate the life they've been given.

 

[milomak]

Except the US has competent people in charge of the economy

we've had positive growth in every quarter since the late 90s or early 2000s. I believe the US has had a recession in that time.

EDIT: Here is a September 2007 report that shows at that the time the report was compiled there had been 36 quarters of positive growth. Even the last GDP report (while disappointing) was positive. So we know the number is greater than 36 quarters at this point in time.

This shows the US wasn't in a technical recession, however negative growth in quarters fairly close to each other.

 

[werner]

we are living in interesting times gentlemen

 

[PeterCH]

we've had positive growth in every quarter since the late 90s or early 2000s. I believe the US has had a recession in that time.

US had the Great Depression in 1929 and they recovered faster
and better than Europe, Asia and South Africa (at that time).

We're facing a recession now but made much worse by LOCAL
CONFOUNDING factors, namely idiots in the government and in
charge of essential utilities which are responsible directly
for powering our economy which is largely based on mining.

The rest of the economy is consumer driven - as you can
see by the article about all the restaurants going bust,
times are not looking good for businesses which
depend on local consumers rather than production
and export of that production.

Let's just say that the power crisis, the fuel crisis, water and other
problems we have are above what America has. We're not
just a country with a handful of educated haves and millions
of have nots with no education but we're also led (that includes
key utilities) by people who simply don't care or are incapable
of doing better than they are.

So the outlook looks bad, I'd say, if USA gets hit with hard say H,
I'm sure we'll be hit with 100H, ie we'll feel it many times as hard than
the Americans and the Chinese and Europeans who'll feel it hard no
doubt too.

 

[PeterCH]

we are living in interesting times gentlemen

They would be less interesting if some people planned ahead and acted
in a patriotic manner, but hey then we'd be Americans, Europeans,
Japanese or maybe even citizens of the UAE.

 

[PeterCH]

How many of those problems are we currently facing? The fact that it didn't snowball into total anarchy like some nay sayers predicted gives me some faith that things are getting better.

What do you mean?

Has the electricity supply problem suddenly improved and
new power plants have sprung up like mushrooms after the
rain? Has the electricity price we as consumers and businesses
pay also miraculously dropped to previous levels?

As for total anarchy, which country HAS gone into total
anarchy over the last few years? (other than countries
which were already in such - eg Somalia).
Even Zimbabwe is still afloat, its rules pronouncing
that there is no crisis. Its still on the map....

SO I dunno what anarchy you mean, but the numerous
impediments to economic growth when we could
still enjoy some ahead of the inevitable recession
which is looming ahead, well those impediments just
made us a bit weaker to start off with. And no-one
but we can be blamed for this. Can't blame Bush
for Eskom etc.

 

[milomak]

PeterCH - Do you use the term recession in its correct use or in the more layman term of slowing growth, even if the growth is positive?

EDIT: I meant to add, that our economy has not been consumer driven for possibly the last year (when indicators finally started to show a consumer under stress). I would submit that even before that the economy has not been driven by the consumer. Private construction spending and government infrastructure spending have helped maintained the economy (providing money to workers, companies etc).

In case you misunderstand, I do believe that SA growth will slowdown from what we've seen in the last 3 years.

 

[Turiko]

Except the US has competent people in charge of the economy (debatable) who
appear to have some accountability. In SA, there is no accountability or responsibility,
judging by the f-ups which resulted in petrol, electricity and water shortages which
are seriously curtailing the growth of the economy.

Peter I've known about your love of the USA for quite some time now, it's been that way for years. The problem is that, unlike you I sit with the reality that my line of work makes me a target for their government and their PATRIOT act and other crap. If they can arrest a Russian programmer as he tries to attend a conference, what are they going to pull on us coders from SA?

I am in manufacturing- we manufacture consumer electronics for export and local markets, and we're doing better than many other companies are at the moment. We're not laying off staff, nor are we feeling the pinch of declining sales as our exports are picking up substantially. So I am reticent to believe these MSI reports or whatever because these people come out of the woodwork when times are tough but when times are good they're as silent as a submarine

 

[alloytoo]

Except the US has competent people in charge of the economy (debatable) who
appear to have some accountability. In SA, there is no accountability or responsibility,
judging by the f-ups which resulted in petrol, electricity and water shortages which
are seriously curtailing the growth of the economy.

Overall I rate the job Tito and Trevor have done as pretty good. Unfortunately I don't expect Tito and Trevor to be around much longer.

 

[Generator Man]

Im still at a loss to understand people that say we're having it good.

Good compared to what? Zimbabwe? I don't think that is a good comparison.

Our economy is well and truly poked, yes there is the odd sector that is doing well (auction houses for one, mining, etc) that doesn't mean that the rest is rosy, far from it.

Government is doing sweet F-all to try and rescue the situation, we are talking of thousands of homes being reposessed, businesses folding left right and centre, and people (skilled ones at that) fleeing out of the country at an alarming rate. Not to mention that this is resulting in massive job losses in a country that already has amongst the highest unemployment rates.

I cannot believe for one moment that our economy is still growing, exclude mining from the basket and lets see where our economy is growing currently.

Yes oil prices and the global recession has hit every country badly, but in our case our government has done a jolly good job of making sure that legislation such as the NCA, F-ups from Eskom and their obsession with silly labour laws have ensured that even more people are sinking into poverty at an alarming rate. All the meanwhile they are concentrating on their own power struggles and making sure that the West keeps their noses out of Zim's business

Excuse me for being sceptical, but there is no pro-active involvement from our government in trying to lessen the burden of the global trends on our country, if anything they have done a good job of making things worse for everyone with the exception of themselves.

Is there a way back from this? 2010 (if we still get it) might be the boost injection that turns things around, but do you think that all the people (remeber these people are not only skilled brain power that is leaving, but also big spending power) will return? And everyone that has lost millions in their businesses going bankrupt will miracolously rebuild their empires overnight? With interest rates in their high teens and impossibility of getting any credit from the banks to rebuild any form of business?

All of this under the prospect of leadership under the communist wing of the ruling power, with a whole new bunch of fools that are hungry to lay their hands on everything that the current leaders have been engorging themselves on?


Sorry, I don't buy it.

 

[Toffee]

Overall I rate the job Tito and Trevor have done as pretty good. Unfortunately I don't expect Tito and Trevor to be around much longer.

Agreed. They are the best combination of Finance Minister/Reserve Bank Governor we have had in my (many) adult years. If either of them go in the short term will be realy bad news for SA.

 

[icyrus]

Peter I've known about your love of the USA for quite some time now, it's been that way for years. The problem is that, unlike you I sit with the reality that my line of work makes me a target for their government and their PATRIOT act and other crap. If they can arrest a Russian programmer as he tries to attend a conference, what are they going to pull on us coders from SA?

Care to elaborate how the PATRIOT act is affecting you?

 

[Albereth]

Troye Lund clearly needs to drink a few chardonnays before committing pen to paper, or finger to keyboard.

 

[boramk]

I think PeterCH and Generator Man elaborated quite well on the matter.

Things look bleak.

You don't need to be a businessman to know business is not good.
You can be a random person just walking along the streets and you can already see the difference between 5 years ago, and now.