Business Day Spotlight
PODCAST | Stanlib findings show SA’s national savings trail global average
In this edition of the Business Day Spotlight we're discussing the economics of SA’s low household savings.
Our host Mudiwa Gavaza is joined by Kevin Lings, chief economist at asset manager Stanlib, to discuss their new Savings Report.
Lings says the sudden and dramatic impact of the Covid-19 pandemic has highlighted how unprepared South Africans are for unforeseen financial shocks. Deprived of a steady income, many have had to dip into long-term savings to fund day-to-day expenses, which will no doubt affect their longer-term savings plans.
Join the discussion:
The discussion begins with Lings explaining the importance of household savings to the country and its growth prospects.
Individual and household savings are used, collectively, as investment capital in an economy. Increased savings allow banks and other financial institutions more funds to lend to businesses and other entities that can develop operations, possibly employing more people. They also provide capital for building schools, roads, hospitals and other infrastructure.
At just under 15% of GDP before the lockdown, Lings says SA’s national savings were already trailing behind the global average of about 25%. He says the Covid-19 crisis has magnified what was already an uncomfortable reality, pointing out that SA’s savings rates have dwindled over the past 40 years, driven by rising consumerism.
Outside funds that people have to put away for retirement through employers, Lings says it would be good for South Africans to have about three months of expenses set aside as part of an emergency fund. Once in place, people can continue to actively set money aside and create a general culture of saving.
This is of course much easier said than done, but Lings says the ongoing Covid-19-induced crisis shows what does happen when such mechanisms are not in place.
The discussion also explores other key insights from the report, the data used for the study, as well as an outlook for the economy going forward.
For more episodes, click here.
Engage on Twitter at #BDSpotlight or via e-mail at MullerP@arena.africa
• Business Day Spotlight is a MultimediaLIVE production.
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