2017 will be a better year for construction

03 November 2016

South Africa’s economy is poised to grow by between 2-3% in real terms next year, which will have a knock-on effect in the building and construction sectors and lead the way out of the protracted downturn the market has experienced.

This is according to the acclaimed economist, Dr Roelof Botha, managing director of GOPA Group SA, who was speaking at the recent Readymix Conference by Sarma, where he encouraged delegates to look out for opportunities as the markets turn.

“Despite the largely negative sentiment that exists in South Africa at present the economy is still in relatively good shape and has, in fact, faired far better than other emerging market peers. Due to the diversity of our economy we have largely riden-out- the-storm thanks to sectors such as agriculture and services industries which provided a counter balance to ill performers.

“Other factors also indicate reasons to be bullish, such as increased gold demand which is at the second highest level in the history of the world. Just recently China purchased 1400 tons of gold and Russia 1000 tons, among others. This is good news for our mining sector and as commodity prices begin to swing back up it will get even better,” says Dr Botha.

On the building front the number of building plans being passed is looking better and will lead to increased activity in future when they are converted to actual building projects. Another indication of improvement is that hardware sales are turning upwards. “This is an inherently stable market and the slightest bit of improvement in the economy should translate to positive growth in the sector.”

As for the negative sentiments, Dr Botha predicts that these will prove to be largely unfounded and that any possible downgrades will not happen in the near future. Also, he expects the Rand will not go into freefall as many naysayers might suggest. The only caveat, of course, is the unpredictable political environment and the extent to which markets will react to the internal strife within the national government.

“There is a lot of positive and a lot of money to be made. We predict that CPI will go down and as a result interest rates will not rise again in the near future. At present, our per capita disposable income ratio is good, the index of manufacturing volume is rising; and metals prices, of the type mined in South Africa, are up by 20%. That means overall our macro-economic outlook is better than one reads in the media.”

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