With the economic recovery in South Africa still on a slow pace, the volume of Durable Goods orders has increased by a marginal 0.3% in August from the previous month. However, with consumer prices have continued to fall and the real estate market is recovering, the overall growth rate is likely to be higher.
Durable Goods orders are one of the main contributors to the overall Gross Domestic Product (GDP), contributing around 9% of the GDP. The orders are mainly for food, clothes, machinery, and other household items. The growth rates in Durable Goods orders have been stable over recent years, but there was a slight slowdown in the third quarter of 2020 due to the global recession.
As a result of this slowing economy, the volume of Durable Goods orders is likely to be higher than usual. The increase will only be marginal, but it could push up the price of the goods.
In addition to the increase in Durable Goods orders, the government also introduced an extended sales programme which was aimed at reducing the backlog of unclaimed properties. This scheme was successful in reducing the backlog of unclaimed property in the first six months, but it has failed to achieve its long-term objective. Since the scheme has been implemented in the first six months, the government expects that it will have a positive effect on the GDP growth. However, the long-term impact will depend on the progress made by the collection agencies during the next few months.
Apart from the increase in Durable Goods orders, the government is also encouraging business establishments to invest in new projects by offering incentives like tax rebates, business rates reduction, and more. It also announced the extension of the existing corporate investment scheme to businesses that are unable to increase their capital amount.
The Government is also trying to increase the volume of Durable Goods orders through the procurement of additional capital. by providing lower tax rates, which is one of the key reasons for the increased order volumes. Incentives such as tax rebates and better returns on capital have encouraged both domestic and international investors to purchase Durable Goods.