What the future holds for the Lowveld economy

MBOMBELA – Keynote speaker, Henri Pieters, is a director at Stabilis Chartered Accountants, Nelspruit. He boasts a wealth of experience in business in the Lowveld.

According to Pieters’ forecast, the global and local economy is facing the worst recession in 10 years.

“Consumer trust indexes are down and the global and South African economies are in a very bad state,” he said.

Attendees were taken through a series of slides indicating a bleak outlook for the advanced world economies that included the United States, Europe, the United Kingdom and Japan.

Forecasts for emerging and developing countries India, Brazil and Russia also showed reduced growth rates, with China being the only one that has seen a positive rate amid the global coronavirus lockdown.

“The biggest impact on the world economy by Covid-19 has shown China to have experienced a 22 per cent growth rate, while the US had a four per cent growth rate. South Africa was down 24 per cent,” said Pieters.

Nationally, South Africa experienced 3,1 per cent job losses with recovery anticipated to be much slower due to the country’s debt.

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“At this stage, we simply do not have the resources to service or repay this debt,” he added. According to Pieters, it took the US about six years to recover from the last global recession.

“The South African economy is not the US economy. We have brilliant plans for recovery, but no implementation.”

Coupled with the effects of the global lockdown and economic recession was the uncertainty over this year’s US election, Pieters added.

“For pro- and anti-Trumpers, the upside is that while he grew the economy, Biden could end the trade war with China. This can only be good for the South African economy, even though either candidate being elected will have little to no impact on the Lowveld.

Pieters cited mining, community services and trade as the biggest contributors to the provincial economy, while construction, trade and tourism would be the most adversely affected.

“Ninety five per cent of businesses have seen a greater than 50 per cent decrease in turnover, with almost 50 per cent staff laid off on short term, with 32 per cent permanent job losses.”

As a result of this, he predicted a 25 per cent decrease in Buscor passengers, while highlighting that the Lowveld boasted key sectors such as the KNP, and Barberton as a World Heritage Site.

“In spite of the bleak picture, there are success stories of businesses that have made a quick turnaround, especially in the agricultural and tourism sectors.”

His advice to Lowvelders was to buy local and support local businesses to maintain a firm grip on buying power.

“All sectors have enough opportunities, especially agriculture and tourism. If everyone made a contribution, there will be a positive change. Only you can make the difference. Do not look to government or anyone else to make the change,” he concluded.

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