1st Quarter 2014 THE KWAZULU-NATAL QUARTERLY ECONOMIC AND STATISTICAL OVERVIEW EZOMNOTHO

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1 1st Quarter 2014 EZOMNOTHO

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5 1. INTRODUCTION 1.1 Foreword Ezomnotho Ezomnotho Ezomnotho MEC FOR DEPARTMENT OF ECONOMIC DEVELOPMENT, TOURISM AND ENVIRONMENTAL AFFAIRS 1.2 About this Publication 1.3 Authorship of the Publication EZOMNOTHO

6 Figure 1.1: Provincial Contribution (%) to South Africa, 1 st Quarter KwaZulu-Natal at a Glance Table 1.1: Various Economic Indicators, KwaZulu-Natal & South Africa Source: Quantec Research, 2014 Indicator KwaZulu-Natal South Africa Figure 1.2: Sectoral Contribution (%) to GDP-R, KwaZulu-Natal & South Africa, 1 st Quarter 2014 GDP (R'000s) GDP Growth Population (000s) Working Age Population (000s) Unemployment (000s) Unemployment Rate Labour Force (000 s) Absorption Rate Gini Coefficient Human development Index (HDI)- ( Functional literacy Inflation Foreign tourists per annum Cargo tonnage handled at ports (000s)- Number of containers handled at ports - Hotel occupancy rates Total Air Passenger Movements at King Shaka International- Source: Quantec Research, 2013 Source: Stats SA, IHS Global Insight, Quantec Research, ACSA, Transnet, Forward Keys Database, 2014 EZOMNOTHO

7 KwaZulu-Natal's Comparative Advantages 2. GLOBAL ECONOMIC DEVELOPMENTS AND OUTLOOK 2.1 Recent Global Developments Global Economic Outlook Table 2.1: Average GDP Growth (%), Global Regions, *, * World Advanced Euro-Area Emerging & developing Sub-Saharan Africa Latin America and the Caribbean Source: IMF, 2014 Note: * indicates forecasts Country Group Name Middle East, North Africa, Afghanistan & Pakistan Average Economic Growth Rates * EZOMNOTHO

8 . 2.2 Commodities World Commodity Indices Ukraine: Local Crisis, Global Impacts Figure 2.1: Month-on-Month Growth in Crop Prices, May 2013-April 2014 Month-on-Month Growth (Crop Prices) Source: IMF, 2013 Note: Base (100) = year Brent Crude Oil Market Prices and Uncertainty report 2 EZOMNOTHO 3

9 Figure 2.2: Monthly Average Brent Crude Oil Price, * US$ Per Barrel Source: EIA, 2014 Note: * indicates forecasts Gold/Copper Ratio Figure 2.3: Gold Price to Copper Price Ratio, January 2013-May 2014 Ratio Source: Investing.com & own calculations, Inside Information Nigeria s Rebasing of its Gross Domestic Product Displaces South Africa as the Largest Economy in Africa. 4 EZOMNOTHO 5

10 global competitiveness Figure 2.4: Trade Balance with Nigeria, South Africa & KZN, R' Billions Source: Quantec Research, 2014 trade Figure 2.5: Net FDI Flows, South Africa & Nigeria, FDI (Billion, Net Inflows) Source: World Bank, 2014 SA Share of SSA foreign direct investment Figure 2.6: Economic Contribution to Sub-Saharan Africa, * GDP Growth KZN Share of SSA Source: IMF WEO & Own Calculations, 2014 Note: * Indicates forecasts. Purchasing Power Parity Conversation Rate by IMF was used in calculations. 6 EZOMNOTHO 7

11 Policy Implications: 3. DOMESTIC ECONOMIC DEVELOPMENTS South Africa s gloomy economy 3.1 Economic performance in South Africa Quarter-on-Quarter Gross Domestic Product (GDP) Growth Rates 8 EZOMNOTHO 9

12 Figure 3.1: Quarterly and Annual Growth in GDP, South Africa, 2009:Q1 2014:Q1 Percent Source: Stats SA, First Quarter Sectoral Drivers of GDP Growth Table 3.1: Sectoral Growth Trends (%), South Africa, 2013:Q4-2014:Q1 Source: Stats SA, 2014 All industries at basic prices GDPR at market prices Economic Performance in KwaZulu-Natal KwaZulu-Natal Growth Trends Figure 3.2: Quarterly Growth in GDP, KwaZulu-Natal, 2009:Q1-2014:Q1 Percent Source: Quantec Research, EZOMNOTHO 11

13 3.2.2 KwaZulu-Natal Sectoral Drivers Table 3.2: Sectoral Growth Trends (%), KwaZulu-Natal, 2013:Q4-2014:Q1 Industry 2013:Q4 2014:Q1 Q-O-Q Y-O-Y Q-O-Q Y-O-Y All industries at basic prices GDPR at market prices Source: Quantec Research, First Quarter 2014: Regional Comparisons Figure 3.3: Comparative Regional Annual Growth Rates, 2013:Q4 and 2014:Q1 Growth Source: Quantec Research, 2014 Policy Implication 12 EZOMNOTHO 13

14 4. INFLATION Figure 4.1: Annual Inflation and Producer Price index, South Africa, January - April 2014 Inflation Rate January February March Figure 4.2: Geographical Headline Inflation Rate, Provincial, January - April 2014 Source: Stats SA, 2014 Inflation Rate (%) Source: Stats SA, EZOMNOTHO 15

15 Inflation Outlook 5. EXCHANGE RATE Figure 5.1: Monthly Average Rand/US$ Exchange Rate, January 2006-May 2014 Rand/US$ Source: SARB, EZOMNOTHO 17

16 6 INTERNATIONAL TRADE 6.1 South Africa s trade position, Q4:2013: Who did South Africa trade with? Table 6.1: Trade by World Zone (incl ships/aircraft stores), South Africa, Q1:2013 & 2014 Trade balance Total % % Source: SARS, Exports Imports Export/import ratio (EIR) 6.2 What did South Africa trade in? Table 6.2: Export & Import Trade by Product, South Africa, Q1:2013 & Q1:2014 Total % % EZOMNOTHO 19

17 Exports Imports 6.3 What did SA trade with the rest of the Continent? Figure 6.1: Detailed Exports by Product to Africa, South Africa, January-April 2014 Export/import ratio (EIR) Note: Data is Cumulative trade by country 20 EZOMNOTHO 21

18 Figure 6.2: Detailed Exports by Product to Africa, South Africa, January-April KZN Trade Performance 2013 Table 6.3: KwaZulu-Natal s Leading Export and Import Markets, 2009 & 2013 Source: SARS, 2014: Note: Data is Cumulative trade by country Source: Quantec Research, 2014 United States 9.5% United States 10.4% China Japan 7.8% China 6.4% Japan China 6.1% Japan 4.9% Germany United Kingdom 4.7% United Kingdom 4.7% United States Netherlands 4.6% Netherlands 4.6% Australia Republic of Korea 3.6% Algeria 3.5% Argentina Indonesia 3.3% Zambia 3.4% Thailand Nigeria 3.2% India 3.3% United Kingdom Mozambique 2.9% Mozambique 3.2% India Zambia 2.8% Zimbabwe 3.1% Malaysia Top Ten Share of Total 48.5% 47.5% 70.9% 16.7% China 13.5% 13.5% Japan 11.1% 8.1% Saudi Arabia 7.9% 6.4% India 5.8% 6.2% Thailand 5.2% 5.8% Angola 5.1% 4.8% Australia 4.3% 3.4% Germany 3.8% 3.0% Singapore 3.2% 3.0% United States 3.2% 62.9% 22 EZOMNOTHO 23

19 7 INVESTMENT DEVELOPMENTS 7.1 South Africa s Domestic Investment, Fourth Quarter 2013 Figure 7.1: Growth in GFCF (Q-t-Q, SAA*), Q1:2012 Q4:2013 By Sector Figure 7.2: Growth in GFCF by Economic Sector (Q-t-Q, SAA*), Q1-Q4:2013 Growth Source: South African Reserve Bank, 2014 Source: TIKZN calculations using South Africa Reserve Bank data, 2014 Note: * indicates seasonally adjusted and annualised. 24 EZOMNOTHO 25

20 By Asset Class Figure 7.3: Growth in GFCF by Asset Class (Q-t-Q, SAA*), Q1-Q4:2013 By Type of Business Figure 7.4: Growth in GFCF by Type of Business(Q-t-Q, SAA*), Q1-Q4:2013 Growth Growth Source: TIKZN calculations using South Africa Reserve Bank, 2014 Note: * indicates seasonally adjusted and annualised. Source: TIKZN calculations using South Africa Reserve Bank data, 2014 Note: * indicates seasonally adjusted and annualised. 26 EZOMNOTHO 27

21 7.2 KwaZulu-Natal Investment Monitor Figure 7.5: KwaZulu-Natal Investment Monitor, February 2014 Indices Source: Economist.co.za, 2014 The Up ICP Equipment Investment Shows Double-digit Growth And the Down Transport Equipment Investment Disappoints Building Investment Down Again Civil Construction Investment on Slippery Slope Transfers Investment s Growth Slows Down Machinery Investment Decreases Table 7.1: Summary of Results, February 2014 Transport Equipment Buildings Civil Construction Machinery ICT Equipment Transfers Total Investment Index Source: Economists.coza (2014) 28 EZOMNOTHO 29

22 7.3 Some Major Infrastructure Projects in KwaZulu-Natal Flour mill project: Bakhresa SA (a TIKZN-facilitated project) Thukela pipeline project: Umgeni Water D-1867 road upgrade project: KwaZulu-Natal Department of Transport Durban port upgrade and expansion project: Transnet Ingula pumped-storage scheme project: Eskom Flexiton paper mill upgrade project: Mpact Liquefied petroleum gas storage facility project: Petredec Northern aqueduct augmentation project: ethekwini Municipality Mkuze biomass project: Navosync 30 EZOMNOTHO 31

23 8. LABOUR MARKET TRENDS 8.1 Introduction 8.2 Overview of the Labour Market Table 8.1: Labour Market Aggregates, 2013:Q3&Q4 & 2014:Q1 KwaZulu-Natal Labour Market Aggregates (Thousands) Labour Force Participation (Percent) Unemployment Rate (Percent) South Africa Labour Market Aggregates (Thousands) Labour Force Participation (Percent) Unemployment Rate (Percent) Source: DEDT calculations based on QLFS (Stats SA, 2014) Source: DEDT calculations based on QLFS (Stats SA, 2014) Employment to Population Ratio 32 EZOMNOTHO 33

24 8.3 Labour Force Participation in KwaZulu-Natal Table 8.2: Composition of KwaZulu-Natal Labour Force, 2013:Q1&Q4 & 2014:Q1 Source: Source: DEDT DEDT calculations based based on on QLFS QLFS (Stats (Stats SA, SA, 2013) 2013) Narrow LFP By Race African Coloured Asian White By Gender Male Female By Age Group 15 to 24 year olds 25 to 34 year olds 35 to 44 year olds 45 to 54 year olds 55 to 65 year olds By Educational Attainment No education Grades 0 7 Grades 8 11 Grade 12 Diploma/Certificate Degree 8.4 Employment in KwaZulu-Natal 34 EZOMNOTHO 35

25 Table 8.3: Demographic Characteristics of Employment, 2013:Q4&2014:Q1 Source: DEDT calculations based on QLFS (Stats SA, 2014) Source: DEDT calculations based on QLFS (Stats SA, 2014) Sectoral Employment Composition/Trends 36 EZOMNOTHO 37

26 Table 8.4: Sectoral Composition of Employment, 2013:Q4 & 2014:Q1 KWAZULU-NATAL Total Employment Primary Sector Secondary Sector Tertiary Sector SOUTH AFRICA Total Employment Primary Sector Secondary Sector Tertiary Sector Source: DEDT calculations based on QLFS (Stats SA, 2014) Source: DEDT calculations based on QLFS (Stats SA, 2014) 8.5 Unemployment in KwaZulu-Natal 38 EZOMNOTHO 39

27 Table 8.5: Narrow Unemployment Rates, KZN, 2013:Q1&Q4 & 2014:Q1 Source: DEDT calculations based on on QLFS (Stats SA, SA, 2014) 8.6 Long-term Unemployment Table 8.6: Characterisation of the Unemployed, KZN, 2013:Q4-2014:Q1 Overall narrow unemployment Source: DEDT calculations based on QLFS (Stats SA, 2014) Source: DEDT calculations based on QLFS (Stats SA, 2014) 8.7 Labour Market Outlook 40 EZOMNOTHO 41

28 9. INFRASTRUCTURE 9.1 KwaZulu-Natal Port Movements Volume of Vessels Figure 9.1: Total Number of Vessels, KZN & SA, July 2012-April 2014 Number of Vessels Source: Transnet, March Cargo 9 handling (metric tons) Figure 9.2: Total Cargo Handled (metric tons), KZN & SA, July 2012-March 2014 Metric Tons (Millions) Source: Transnet, Container Handling 42 EZOMNOTHO 43

29 Figure 9.3: Total Number of Containers Handled, Durban & SA, July 2012-March 2014 Number of Containers Source: Transnet, March Road Statistics Table 9.1: Light Vehicles through the Mooi Toll Plaza Heading to the Coast, First Quarter 2013 & 2014 January February March Source: SANRAL, OTHER ECONOMIC INDICATORS 10.1 Construction Industry Developments Figure 10.1: Growth in the Value of Approved Building Plans, Large Municipalities, South Africa, 2012:Q1 2014:Q1 Source: Stats SA, 2014 Note: Growth is calculated at current prices 44 EZOMNOTHO 45

30 Figure 10.2: Share of Value of Building Plans Passed, Large Municipalities, Jan Mar 2014 Table 10.1: Employment in the Construction Sector, SA & KZN, 2013:Q1&Q4 & 2014:Q1 Number (Thousand) Growth Source: Stats SA, 2014 Buildings reported as completed Figure 10.3: Share of Value of Buildings Completed, Large Municipalities, Jan Mar :Q1 2013:Q4 2014:Q1 Q-O-Q Y-O-Y Q-O-Q Y-O-Y Change Change Change Change South Africa KwaZulu-Natal Source: Stats SA, 2014 Source: Stats SA, Land Transport Freight Transport Source: Stats SA, EZOMNOTHO 47

31 Figure 10.4: Growth in Freight Transportation Income, South Africa, 2012:Q1 2014;Q1 Source: Stats SA, 2014 Table 10.2: Contribution of Industry towards Freight Transport Income, South Africa, 2014:Q1 Source: Stats SA, 2014 Total 25, Passenger Transport 10.3 Retail Trade Sales Figure 10.5: Retail Trade Sales, South Africa, 2012:Q1-2014:Q1 R (Billions) Source: Stats SA, 2014 Growth 48 EZOMNOTHO 49

32 10.4 Motor Trade Sales: South Africa and KwaZulu-Natal 10.5 Tourism Developments International Tourism Developments South African Tourism Developments- Tourist arrivals in South Africa Table 10.3: International Tourist Arrivals in South Africa, Oct, Nov & Dec 2013 & Jan-Dec 2013 Total Arrivals Region Oct 2013 Nov 2013 Dec 2013 Jan - Dec 2013 Europe Russia North America Central & South America Brazil Australasia Middle East Asia China India Africa Grand Total 794, , ,935 9,616,964 Source: South African Tourism, EZOMNOTHO 51

33 Tourism Accommodation Table 10.4: South African Tourist Accommodation Industry, Q1:2014 Source: Stats SA, 2014 Indicator Jan 2014 Y-on-Y Feb 2014 Y-on Y Mar 2014 Y-on-Y Table 10.5: Hotel Occupancy Rates, Selected Regions (%), Q1:2014 Source: STR Global, 2014 Region Jan 2014 Feb 2014 Mar EZOMNOTHO 53