The May 2025 figures for business liquidations came out a few weeks ago and there is no good news as the numbers remain fairly consistent. When there is weak economic growth with a reported 0.1% which is also questionable because there are too many empty retail and business properties. The empty spaces have been steadily increasing and there is no one taking up the leases. It just feels like the economy has been in a recession since 2018 as there is no money around. This was due to corruption with the last government draining the coffers and they have not been replaced so the country has not moved forward.
The article I was reading tried to put a positive spin on the business liquidations saying the numbers had decreased slightly from a few years ago which is very true. The problem is those overall numbers have shrunk because there are less businesses today compared to back then so you cannot hide the facts.
SA's GDP was forecast to grow by 2% for 2025 and has already been adjusted with a forecast below 1% which again seems like wishful thinking with 30% US tariffs live on the 1st August. I just do not see any GDP growth considering vehicle exports are down 82% for the first 6 months.
I was looking at opening a new business this year and that has been placed on hold because the risks outweigh the gains under this economic climate. The customer base is shrinking and the number of families that have any disposable income is limited. You cannot presume other families have what you have and I know the majority of households are in serious financial jeopardy. There is not much good news coming out of SA these days and this will only deteriorate further.
The liquidations do not help the unemployed statistics, but the upside is those that remain in business whilst others are closing have a larger share of the pie and helps them stay in business. This is the only positive spin you can place on these types of stats otherwise it is all doom and gloom.
Another upside in our business is I am on the look out for a fork lift with no luck finding the right one as yet, but with companies closing there will be one available somewhere at the right price. There is a lot of inventory with the dealers and as expected they are over priced asking ridiculous prices.
From what I am gathering businesses are doing a wait and see type approach and have been doing this for a couple of years now. They are not investing into projects and are keeping their cash for just in case and the unknowns. Most businesses are operating on skeleton staff so there is no luxuries and employees chip in and help in areas where they are required.
To give you an example when we have days of 3 or 4 containers arriving from the port we hire temporary/casual staff where as in the past we would have enough staff to handle this. The other aspect is the BEE requirement is when having 50 or more people in a business you have to adhere to the DEI laws. We had the Department of Labor this week pay a visit so they are checking up on every business and this does not help business grow and is the exact opposite being a hinderance. This initiative could actually be the final straw for many businesses and these liquidation numbers could still grow in the second half of this year so this will be interesting to watch. This is not rock bottom and we have to see how the tariffs now impact the economy and business in general.