There is a surplus of economic news that appears to lead to one conclusion: the economy is at serious risk of recession. The latest FNB/Bureau for Economic Research (BER) building confidence index released on Tuesday adds further weight to this conclusion.
Confidence in the building industry dropped 11 points on a 100-point scale to 41 in the second quarter after breaching the key 50-index-point mark in the first quarter.
Key to this deterioration was an unexpected decline in the building activity of non-residential contractors while the activity of residential contractors weakened.
John Loos, a property economist at FNB, said the activity levels of quantity surveyors worsened noticeably, which meant the building pipeline overall deteriorated during the quarter.
Other disappointing economic indicators point towards a further slowdown in the economy, not least the Rand Merchant Bank/BER business confidence index remaining at 41 points in the second quarter.
Investec economist Annabel Bishop said this very poor reading was concomitant with an economy at risk of recession.
The rate of growth in total new vehicle sales, another leading indicator of economic activity, has also been declining. Total new vehicle sales last month dropped by 9.2 percent year on year following a 10.7 percent decline in April.
Nico Vermeulen, the executive director of the National Association of Automobile Manufacturers of SA, said the economy was losing momentum and risked moving into recession.
Against this backdrop, it’s hard to imagine what has changed or will change in the remaining few days of this quarter to prevent the economy from registering a second consecutive quarter of negative growth – and officially be in recession.
South African households must hope and pray that the confident pronouncements by Finance Minister Nhlanhla Nene and Reserve Bank governor Gill Marcus that the economy would not go into recession is well founded and they know something that others do not.
Agribusiness
This week, the world of agribusiness met in Cape Town, the finest city of the impoverished and poverty-stricken Africa.
The city hosted the 2014 International Food and Agribusiness Management Association symposium, where more than 150 food and agriculture papers were delivered by local and international academics, economists and other experts.
But when it comes to Africa, even though the continent is familiar with the term “agribusiness”, agriculture and business have a distinction.
Business is for profit whereas agriculture is for self-sustainability, the eradication of personal hunger.
Topics on food security are sensitive when discussed in the African context and conferences of this nature often look more like those of UNAIDS ( the UN programme on HIV/Aids) rather than the black-tie mining indabas.
According to the 2014 index sponsored by DuPont, while global food security improved in the past year, getting to the scores of 50 points out of 100 in South and Central America and around 30 in poverty-stricken Asian countries, in sub-Saharan Africa, the 30-points mark is more prevalent and is not just for a few countries.
Only South Africa and Botswana had scores above 50 points.
Sub-Saharan Africa had the lowest regional score in the index and it also scored the lowest in each of the index categories as 18 out of 28 featured countries from the region were low-income countries.
One of the factors that undermined food security was affordability, even though the region has experienced one of the highest economic growth rates in the past few years.
But Africa has what the rest of the world envies: the land. The continent uses less than 25 percent of its arable land and less than 15 percent of the irrigation potential.
What has stopped Africans from getting into agribusiness when there is so much potential? Where is the chain broken and where do we start to fix it? page 20
Edited by Peter DeIonno. With contributions from Roy Cokayne and Londiwe Buthelezi.