KZN returns to outperforming GDP rate
Manufacturing grew by 1.0 percent in 2018, financial services increased by 1.8 percent
KWAZULU-NATAL returned to outperforming the national gross domestic product (GDP) growth rate in 2016 after its regional GDP underperformed in 2015, according to data released by Statistics South Africa.
In 2016 the KZN growth rate was 0.5 percent versus a revised
0.4 percent (0.6 percent) national
GDP growth rate, while in 2015 the respective growth rates were
0.9 percent and 1.2 percent.
The 2015 result was an exception, as KZN generally outperforms the national economy because its regional economy is well diversified, so a poor performance in one sector tends to be offset by a good performance in another sector. In 2017, the latest available data for regional GDP, KZN grew by 1.8 percent compared with 1.4 percent for the national average.
Only the mining/agricultureintensive provinces of Limpopo, North West and Mpumalanga outperformed KZN with growth rates of 2.2 percent, 2.1 percent and 2.0 percent respectively. In 2018, these two sectors had contractions at a national level of 4.8 percent and 1.7 percent respectively, so KZN is likely to have out-performed these provinces in 2018. The 2018 regional GDP data will be released in March 2020.
The 2017 KZN growth was largely based on the recovery in agriculture after two years of drought. Farming value added soared by 31.3 percent in 2017 after a 10.7 percent decline in 2016 and a 7.1 percent drop in 2015. The reason the massive increase in farming did not result in a doubledigit increase for the province is that farming makes up only 3.7 percent of the regional economy.
The largest single sector is manufacturing, with a 15.9 percent share, but manufacturing value added slipped by 0.3 percent in 2017. The next biggest sector is financial services, with a 15.3 percent share, and that grew by 2.1 percent in 2017. General government services had a 15.0 percent share and that eked out a 0.3 percent rise. Trade and tourismrelated activities had a 13.6 percent share, but this sector dipped by
0.5 percent in 2017. Transport, storage and communication had an 11.9 percent share and this sector increased by 1.5 percent in 2017.
At a national level, manufacturing grew by 1.0 percent in 2018, financial services increased by 1.8 percent, general government services added 1.3 percent, trade and tourism-related activities managed only a 0.6 percent gain, while transport, storage and communication rose by 1.6 percent.
These are all sectors where KZN outweighs the national average, which means that KZN should have out-performed the national average. We will see in March 2020 whether this forecast was correct.