News Article : Contracting GDP detrimental to SME development
|Category:|| Economy & Global : Local Economy|
|Author:||Edited by ITInews|
|Posted:||27 Aug 2015|
2015 was expected to be a better year ...
Stats SA’s revelation that South Africa’s Gross Domestic Product (GDP) contracted by an annualised 1.3% in the second quarter is detrimental to the sustainable growth of Small and Medium Enterprises (SMEs).
FNB Head of Enterprise Development, Heather Lowe, says the current economic discourse makes it harder for SMEs to build any form of stability which could lead to job creation.
“The combination of contracting GDP, volatile rand, rising inflation and rising interest rates makes it incredibly tough to run a small business."
"Currently, consumers do not have enough disposable income and corporates will be reluctant to enlist new (SME) suppliers due to economic uncertainty."
"Significantly, the current conditions will not help South Africa’s attempts to fast-track job creation through a viable SME base.”
Stats SA reports that key sectors of the economy such as manufacturing, mining and agriculture contracted during the second quarter.
Even though a number of factors have played a role in South Africa’s economic plight, one of the main reasons is the persisting energy constraints.
Other concerns that have been raised, by both government and business alike, are around the challenges in the steel and broader mining industry.
After a tough 2014 which saw the South African economy grow at less than 2%, 2015 was expected to be a better year for small business.
This is largely due to the South African government’s infrastructure programme and budget allocation for the Department of Small Business Development.
“It is important for the public and private sectors to sustain their efforts to enable this important sector."
"The current challenges highlight the need for improved holistic support which goes beyond just funding,” concludes Lowe.