In my newsletter and blog post of the first week in December 2018, I warned as follow about a difficult first quarter in 2019:
Prediction
“At present most businesses look forward to increased sales during the festive season and “Back-to-School” business in January. But February 2019 I think might become a challenge. Although I do not like to be negative, I think it is necessary to be cautious with spending during the festive season and especially on credit.
There is just so much uncertainty about government policy regarding land reform and an election in the near future, that I believe in this case, less is better. Less spending during the festive season, may perhaps not be what you’ve had in mind for Christmas, but it can make a huge difference in your well-being in February 2019.”
The outcome
And now six months later on the first Tuesday of June 2019, we received the news that the first quarter of 2019 was indeed a shocker.
The economy declined by 3,2%; the biggest decline since the Great Recession in 2008.
Our own “Black Tuesday.” With a population that is growing by 1,2% per annum, this figure is really alarming and underscores the record high unemployment figure recently released.
The term “Black Tuesday” originated from the crash of the Stock Exchange in America on Tuesday 29 October 1929 which ushered in the Great Depression of the 1930’s.
Although some economists still predict a 0,5% growth rate for 2019, I’m not very optimistic that it can be realised. I believe the unstable political environment in which South African businesses need to operate, is the biggest contributing factor to the demise of our economy.
# What to expect
My experience is that changes in the economic cycle usually follows a certain pattern. An upswing or downturn in the economy usually starts in the primary sector (agriculture & mining), then three to six months later the effect is felt in the secondary sector (manufacturing & construction) and another three to six months before it finally trickle down to the tertiary sector (trade & services).
With this in mind the “Black Tuesday” 2019 figures show the pattern of decline as follow:
- Primary sector: minus 11,4%
- Secondary sector: minus 7,4%
- Tertiary sector: minus 0,7%
Never lose hope
I believe that we need to always have a positive vision of the future and that negativity does not give direction and neither lead to growth. Yet the above mentioned figures does not hold good for the foreseeable future.
But without hope for a better day, we will perish. According to Prov 13:12 “Hope deferred makes the heart sick.” But Rom 8:25 teaches
If we hope for what we do not see, we eagerly wait for it with perseverance.
In times of tribulation I think we should remember Rom 5:3-4 “… tribulation produces perseverance; and perseverance, character; and character, hope.” Perhaps it is time for us to hope like Abraham who “… contrary to hope, in hope believed, so that he became the father of many nations.” (Rom 4:18)
We must remember that
although the tide may be out, it does not mean that there’s no water left in the sea.
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