The Eastern Cape's construction sector is likely stimulate the province's economic growth in the short to medium term despite the downturn in the global economy.

Eastern Cape Development Corporation (ECDC) chief executive officer Mxolisi Matshamba says because of the infrastructural backlogs in the province, the construction sector is positioned for growth.

 "The automotive sector will continue to be the leading sector for the regional economy, and if our ducks are in a row, the agro-processing and tourism sectors are also poised for growth.

"There is no doubt that if we develop our human capital and retain skills within the province, we will see positive growth. One of our challenges in the province is that we export our skills to other provinces than any other," says Matshamba.

The province's economy grew by 3,4% by April this year behind the Western Cape and Gauteng. Despite its growth rate dropping by 4% from last April's 7,4% high, the construction industry is on the rise fuelled by infrastructural developments in the major centres.

Independent economist Mike Lewis says that "depending on the depth and duration of the global recession that we are moving into, we may see enterprise growth.

Lewis says this will be achieved through enterprise restructuring for improved competitiveness. "This means we may see enterprises across all sectors devising means to respond to the ailing global economy by re-organising production and those companies with excellent managerial talent will fare better," he says.

Economist Phillip Cole says domestically focused sectors like construction will do better than export oriented sectors.

Cole believes that our automotive sector will be hit hardest by the downturn in the global economy if it does not diversify its markets. The Eastern Cape automotive exports are overwhelmingly to Europe.

"Export oriented businesses should be looking to diversify their overseas markets. Asia, Latin America and the rest of Africa, especially middle income countries, are likely to be less severely affected by the global recession and remain good destinations to seek markets," Cole says.

 "Construction will continue to benefit in the Eastern Cape from World Cup preparations, government infrastructure spending and the IDZs. The new government is likely to focus strongly on social development and it is possible that even more will be spent on education, health, land reform, training and public works. Businesses servicing these sectors are likely to do well," says Cole.

For more information contact:

Mxolisi Matshamba

ECDC CEO

Tel. 043 704 5600

Email.mmatshamba@ecdc.co.za

For ECDC media relations:

Lunga Mtshizana

Tel. 043 726 8833

Cell. 083 618 7557

Email lunga@smgafrica.com