A string of recently released economic data prove South Africa consumers face economic challenges, Paul Jooste, senior manager for business portfolio at credit insurance group Coface South Africa says.
Jooste said when reviewing the health of the South African economy, particularly as to how businesses were faring, certain indicators were critical. He identified these as consumer inflation, the job market, credit extension figures, GDP growth, and corporate health.
“These indicators show first of all how South African consumers are doing in terms of their ability to spend, based on the cost of living and the availability of consumer spend based on the number employed individuals,” he said.
Regarding inflation, Jooste said of particular concern was the increase in the cost of food and transport, as these elements of CPI affected all South Africans.
“The increase in the consumer inflation figures in these two key areas will affect the amount of disposable cash the average South African consumer has to spend,” Jooste said.
There were however some positive signs of renewed growth in the market which include increased credit extension, a stabilisation of liquidations, and interest rate stabilisation, Jooste suggested.
“The maintenance of low interest rates which analysts are expecting to continue will assist both private and corporate individuals in effective debt repayment as well as increased availability of cash as their debt will cost less to repay,” he said.
The growth indicators were being hampered by increased inflation and the unemployment rate, which was translating into slower growth for corporates as well as squeezed margins as corporates worked towards balancing the price of goods with what the market was prepared to pay, Jooste concluded. — I-Net Bridge