Trade conditions weaken for SA

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JOHANNESBURG – The Punitive 15 percent value added tax, higher fuel levy, and violent strikes all contributed to the weakening of trade conditions in South Africa in April.
And economists have warned that efforts to get the economy working again would not be easy.
On Wednesday, the SA Chamber of Commerce and Industry (Sacci) said the Trade Activity Index (TAI) of Sacci’s Trade Conditions Survey for April measured 39, down from 43 recorded in March.
However, the six month Trade Expectations Index (TEI) surged from 52 recorded in March to 54 in April.
Sacci said respondents to the survey pointed to the fuel price increase that affected turnover, putting profit margins under pressure.
“The increase of VAT to 15%, the higher fuel levy, strikes, and looting and property damage at certain locations, had a negative effect on trade activity,” Sacci stated.
The sales price index was up by 2 index points to 61 month-on-month while the input price index remained unchanged at 72. 
The increase, according to the chamber, was caused by the introduction of taxes and levies in the Budget and a rise in the crude oil price and weaker rand. 
Efficient Group chief economist Dawie Roodt said the current trade conditions meant the economy was not doing well.
“People’s income is under pressure and unemployment remains a challenge. On top of that there is an increase in a number of taxes,” he said.
Roodt said this was not a nice environment for the average consumer in the country.
“I’m afraid this is likely to continue unless we get the economy growing again.”
Nedbank chief economist Dennis Dykes said economic performance in the first quarter of the year had not been impressive.
“There’s no doubt we’ve got to keep up the moment on structural reforms so that we can keep the positive environment flying,” he said.
Dykes said the start of 2018 had been very slow in terms of economic figures.
The government needed to bring back investor confidence by resolving, quickly and satisfactorily, the mining charter and the contentious land expropriation without compensation issues.
Investment and job creation were most likely to come if the country was investor friendly.
President Cyril Ramaphosa has said government would fast-track investment projects and reduce red tap hindering investments, as part of his administration’s efforts to raise R1.2 trillion in new investment into the economy.
SA Institute of Race Relations chief economist Ian Cruickshanks said the year ahead would be very dull. He said little growth would be achieved until the national elections in 2019.
“Very few capitalists will risk their capital where they are unsure about the security of their assets. We are already in the middle of the strike season where workers are demanding higher than inflation increases,” he said.
Cruickshanks warned of a relatively subdued economic growth period until the outcome of the 2019 national general election. “Investors want to see the kind of economic policies we are going to have.”