Figures released by Statistics SA on the number of companies that went belly up paints a bleak picture of the state of the economy.
According to the report, the number of liquidations increased by 24.9% in the second quarter of this year compared with the same period for last year.
The estimated number of insolvencies increased by 4.6% in May and a 15.2% increase was estimated in the first five months of this year.
Economist Mike Schussler said: “We are in trouble. A lot of firms are in trouble and South Africa is getting poorer. I think we are in a space where its not going to get easy getting the economy going.”
Schussler said the companies have felt a pinch where there has been little to no growth,
“There is no demand any more for certain industries and when there is no demand its difficult to match prices compared to other companies. We are not on our last leg just yet but we are in a very vulnerable position,” he said.
The StatsSA figures showed that the three worst-hit industries were agriculture with nine business closing its doors, the construction sector with 44 and tourism with 239 businesses closing doors from January to June this year. Liquidations across all industries stood at 1015 and insolvencies, 203.
Economist Dawie Roodt said businesses saw little opportunities emerge from the country.
“It’s very clear that the economic growth and financing is under enormous strain and the country is not in a good space,” he said.
Allen Bodill, executive director of the Master Builders Association Western Cape said there was a general dearth in government spending and infrastructure projects, coupled with political uncertainty and its resultant effect on investor confidence.
Wesgro chief research officer Cornelis van der Waal said: “The construction industry has been under significant pressure for the last three years with little large-scale infrastructure spending this has also impacted on residential construction.
“The tourism industry in the Western Cape and South Africa was very hard hit in 2018 and the first quarter of 2019 by the drought,” he said.
