Once Inspired

It would appear that a turn away from the worst has been made. July 2009 looks to be the date where economic recovery can be seen in most sectors throughout the world.

July saw global income turn positive as well as global industrial production. Overall output in economy also turned positive.

The ERCI indicators have been very strong since July and this appears to be the start of market recovery.  It will however be a fair while until the economy recovers fully and we will more than likely feel the economic downturn well into the next financial year and perhaps even into the following in some cases.

This recession has been the worst for South Africa in 17 years. Seasonally adjusted GDP shrank by 3.0 percent in the second quarter as compared to 6.4 percent in the first quarter.

The recovery of South Africa’s economy will however lag others, after several developed countries saw second quarter growth.

Labour market conditions are not showing signs of improvement yet and remain fragile. Unemployment is still a major risk. South Africa’s unemployment rate ticked up to 23.6% in the second quarter of 2009 which stands as testament to South Africa’s lagging recovery.

Recovery is not yet established and market conditions are still vulnerable. “Conditions for a sustained recovery, led by private demand, are not yet fully established.” said US Treasury Secretary Timothy Geithner.  In another statement he said that global economic growth was “under way”, but there remains “significant challenges” ahead.

It appears that although economic upswing is on the cards many remain cautious.  In a communiqué released from G20 finance ministers in London 10 October this caution is clear to see.

“We will continue to implement decisively our necessary financial support measures and expansionary monetary and fiscal policies… until recovery is secured.”

Recovery can only be secured in one way say some. In order to speed up economic recovery lending activity has to pick up between businesses and banks. They reason that this will encourage enterprise spending which will lead to an increase in employment. That in turn will then drive retail sales. And so the begin of the global economic recovery.