In spite of continuing political volatility within the country, business confidence showed a marginal increase in 2016. Employment levels in construction and electricity remained stable, in contrast to other sectors where employment fell. Construction subcontractors recorded higher confidence levels towards the end of 2016 and overall there was marginal positive growth in the sector.
The construction sector has yet to recover to pre-2010 levels. Contractors continue to experience pressures on margins and a lack of liquidity. The office and industrial sectors are oversupplied, casting doubt on the prospects for a pick-up in growth in these sectors in 2017.
The government is still prioritising infrastructure and power-transmission projects. The major projects under consideration include extensions to the Lesotho Highlands Water Project, and the next phase of the Gautrain extension to Soweto, Mamelodi and the West Rand. A re-commitment to purchase renewable energy by Eskom should give that sector a boost.
The natural resources and mining sectors are still suffering from the effects of weaker commodity prices and a lack of confidence to develop new projects.
Economic growth continues to be negatively impacted by political uncertainty, weak global demand and the downgrade of sub-investment grade. The gradual improvement in the world economy and a projected recovery in commodity prices may support the economy in 2017.