|
Related Topics |
|
We compare the growth in turnover per company size to the growth of South Africa's GDP in order to determine the buoyancy of firms turnover to economic growth.
|
|
Turnover growth compared to GDP growth
The line chart below shows the year on year growth rates in turnover per company size and compare it to the nominal GDP year on year growth rates. The aim is to see how companies turnover react to growth in GDP.
The chart shows that revenue growth for small companies are extremely volatile and exhibits the highest variation among the different firm sizes. Large firms growth is closest to the growth rate of GDP.
While medium sized firms are less volatile in terms of earnings growth than smaller firms it is still far more volatile than larger firms. Concerning for South Africa's economy though is the fact that the year on year growth rates for small and medium firms have been on the decline since September 2017 and December 2017 respectively. Just showing how tough the smaller and medium sized firms have found it to operate in South Africa in recent years.
While the year on year growth rate of large firms has slowed in the recent quarter, at least is still measured positive growth. Small firms have registered negative year on year growth in turnover for the last 3 consecutive quarters and medium firms have recorded negative turnover growth for the last 2 quarters.
With firms struggling to grow their turnover, they will struggle to increase profits and will struggle to grow which in turn means companies will struggle to provide new employment opportunities to the masses of people entering the job market in South Africa and looking for jobs. And unemployment is currently South Africa's single biggest economic issue, with it sitting at levels of around 27.5% (which is around the all time high levels in South Africa).
Business friendly policies needs to be implemented to ensure firms are given every opportunity to grow and prosper in South Africa and increased employment and skills development will follow.
While medium sized firms are less volatile in terms of earnings growth than smaller firms it is still far more volatile than larger firms. Concerning for South Africa's economy though is the fact that the year on year growth rates for small and medium firms have been on the decline since September 2017 and December 2017 respectively. Just showing how tough the smaller and medium sized firms have found it to operate in South Africa in recent years.
While the year on year growth rate of large firms has slowed in the recent quarter, at least is still measured positive growth. Small firms have registered negative year on year growth in turnover for the last 3 consecutive quarters and medium firms have recorded negative turnover growth for the last 2 quarters.
With firms struggling to grow their turnover, they will struggle to increase profits and will struggle to grow which in turn means companies will struggle to provide new employment opportunities to the masses of people entering the job market in South Africa and looking for jobs. And unemployment is currently South Africa's single biggest economic issue, with it sitting at levels of around 27.5% (which is around the all time high levels in South Africa).
Business friendly policies needs to be implemented to ensure firms are given every opportunity to grow and prosper in South Africa and increased employment and skills development will follow.