eThekwini Economic Review 2006 2007 - Durban

1 eThekwini Economic Review2006 2007 / eThekwini Municipality Economic Review 2006 / 2007 Published by eThekwini MunicipalityEconomic Development DepartmentResearch conducted byResearchers:James Dray, Andrew McGill, Graham Muller, Kay Muller, Dayne SkinnerCopyright 2006eThekwini MunicipalityEconomic Develoment DepartmentPO Box 5856 Durban 4000 KwaZulu-NatalSouth AfricaTelephone: +27 (31) 311 3824 Website: : should be noted that any opinions expressed are those of the researchers and not of the eThekwini Economic Development Department or the eThekwini MunicipalityContentsChapter 1 - eThekwini Economyin Context PG Global Economic Non-oil Commodity Oil An Overview of South African Economic Macro- Economic Infl ation The Exchange The Current The Property The Equity Savings and Foreign Direct Forecasts for the South African The eThekwini Municipality in a National

2 Contribution to National OutputChapter 2 - Performance and Outlook PG The Role of the Major Health Meeting Infrastructural Crime, Housing and The Port of Durban : A Matchless Unique Climate and An Effi cient Key Investment The International Convention Centre (ICC) The Film ConclusionChapter 3 - eThekwini Municipality ina Provincial and National Context PG eThekwini Municipality in a Provincial and National Context Land Employment and Education in Primary and Secondary Higher An Assessment of Poverty and Inequality in Measuring Income Health Tuberculosis (TB)

3 Health Crime ConclusionChapter 4 - Structure of the MetropolitanEconomy, Sectoral and Spatial PG Growth Manufacturing in the eThekwini The Recent Performance of the Manufactur ing Petroleum Products, Chemicals, Rubber and Food, Beverages and Automotive Wood and Paper; Publishing and Clothing and The Service Real Estate Overview of the Durban Real Estate Market Residential Property Commercial Property Building Plans Transport Sector.

4 The eThekwini Municipality Foreign Tourism The eThekwini Municipality Domestic Tourism The Durban Hotel The Informal The Future ConclusionChapter 5 - Economic Nodes, Nodal andInfrastructural Development and Investment PG Area Based Management and Development Programmes (ABM Programmes) Cato Manor South Durban iTrump Inner City Inanda, Ntuzuma and KwaMashu (INK) Rural Area Based Key Spatial Development Port of Durban Dube Tradeport and King Shaka International Riverhorse Durban Point King Senzangakhona Widespread Infrastructural ProgrammesChapter 6 - Services and Delivery PG Distribution of Dwelling Quality of Life Meeting the needs of it residentsChapter 7 - Conclusions PG Realising A Mixed Outlook for the Major Unemployment.

5 Poverty and Health Future DevelopmentsFigures PG 64 References PG 66eThekwini Economy in Introduction The economy of the eThekwini Municipality is centred on the transport and logistics activities of the Port of Durban , domestic and export-oriented manufacturing and tourism. As a result, the performance of the metropolitan economy is closely linked to trends in both the global and national economies.

6 In an attempt to position the metropolitan economy within its broader context, this chapter begins with a Review of the aspects of the global economy in 2005/06 that are most likely to shape the Economic prospects of the metropolitan area. The analysis is subsequently extended to the performance of the national economy with a focus on gross domestic product (GDP) growth, employment, fixed investment, inflation and interest rates, the balance of payments and the exchange rate. The chapter concludes with a high-level assessment of the metropolitan area s contribution to the South African economy.

7 Global Economic Outlook Growth According to the International Monetary Fund (IMF) World Economic Outlook ( 2006 ) global Economic growth averaged a buoyant during the second half of 2005 and is expected to maintain this level of performance during 2006 and 2007 , driven largely by strong Economic expansion in China and sustained growth in the United States. This robust level of growth was achieved despite generally rising short-term interest rates, a high oil price and natural disasters including avian flu and the tsunami in southern Asia.

8 Across emerging markets, including South Africa, GDP growth exceeded expectations. The resilience of emerging economies, to date, in the face of potentially adverse conditions such as rising interest rates and higher oil and lower non-oil commodity prices is noteworthy. The benign influence of globalisation on inflation rates throughout the world will continue to moderate these impacts. Furthermore, emerging markets (along with corporations) remain highly unusually large net savers and this will contribute to low long-term interest rates and to a general flattening of the interest rate curve throughout the world, enhancing future growth prospects generally.

9 Non-oil Commodity Prices After a lengthy period of decline, the index of non-oil commodity prices has risen consistently since 2002. The reversal of the long-term downward trend was supported by the widespread global Economic recovery, but in particular by industrial expansion in China, which significantly boosted the global demand for raw materials (UN, 2005). Higher prices in turn, boosted export revenue and GDP in countries with positive net exports of non-oil commodities. This has certainly been the case in South Africa where exports of commodities (mining and agriculture) accounted for 36% of the total value of exports in 2005 and exceeded the value of commodity imports (including oil) by billion in the same year.

10 South Africa has benefited particularly from the surge in coal (energy) and metal prices, since gold and uranium, platinum group metals, coal and diamonds constitute the vast majority of the country s commodity exports. Increases in agricultural commodity prices have been moderate relative to those in metals and energy commodities. It is expected that continued global Economic expansion and in particular the robust industrial growth in China will continue to support most non-oil commodity prices in 2006 . However, the price of agricultural commodities may fall due to favourable harvests and demand for metals is expected to weaken in response to the recent hike in metal prices (IMF, 2005),which may lead to a weakening of some metal prices.