South Africa is undergoing an intensive belt-tightening episode that is part voluntary and part involuntary, leading to significantly weaker growth in household spending. Consumers have over the past three years consistently reported an acute lack of confidence, correctly assessing domestic economic prospects as weak. As a result, they have signalled a voluntary defensive posture through an unwillingness to make big financial commitments such as the purchase of durable goods like houses, cars and furniture. Tighter fiscal and monetary policy, low growth in credit extension to households, higher inflation and weak employment have also forced domestic spending downward. On the fiscal front, the government reduced spending by R10-billion last year and raised revenue/taxes by R17-billion. Another R40-billion of spending cuts and R48-billion of revenue increases is budgeted for in the three fiscal years to March 2018. Interest rates are 200 basis points higher than in January 2014. Relat...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.