- The Reserve Bank says that household expenditure fell in the first quarter of 2019
- This indicates that many households are under financial strain
- This comes as GDP fell by 3.2% in the same time period
The South African Reserve Bank announced yesterday that household expenditure in the first quarter of 2019 fell by 0.8 percent.
This dip is in line with the sluggishness of the economy as a whole, with GDP shrinking by 3.2% during the same time period.
The SARB says that consumer confidence has fallen in the last few months as well.
Despite talk of Cyril Ramaphosa's so-called "New Dawn", the South African economy registered its worst quarter this year since the global financial crisis in 2008/09.
According to IOL, the decrease in household consumption was driven mostly by increasing unemployment, the rising cost of fuel and tax pressure. All of this resulted in a dip in the disposable income of the average household.
All in all, these stats released by the SARB do not inspire confidence. Rather, they show the strained financial circumstances of many South African households.
To address these issue and get the economy moving again, Investec economist Lora Hodes says that policy certainty is needed. Indeed, conflicting government stances on issues such as nationalising the Reserve Bank have roiled markets and made investors skittish.
Cyril Ramaphosa's State of the Nation Address seemed to be aimed, in part, at addressing this issue of investor and consumer confidence. It remains to be seen whether the second quarter of 2019 will deliver more positive economic results than the first.
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