SA still in the economic doldrums
- Branko Brkic
- 30 Sep 2009 (South Africa)
A slew of new economic indicators for South Africa show that the nation has develop a sixties-style aversion to credit and borrowing of every kind. Despite cumulative interest rate cuts of 500 basis points since January, and general signs of recovery, credit-caution is the word of the day.
The show-stopper numbers are those on credit demand. Reserve Bank figures reflect the slowest rate of increase in credit demand since the market wobbled wobbled after the assassination of Hendrik Verwoerd in 1966 (down to 2.34% year-on-year, compared to 3.31% in July).
That was confirmed by Nedbank, which said its internal credit growth is slower than it has been since 1968. At Nedbank instalment sales and leasing finance fell 4.2% year-on-year, the fastest pace in its records, reflecting weak corporate and consumer demand for vehicles and equipment.
Things don’t look much brighter inside the heads of consumers. Regular index numbers from First National Bank and the Bureau for Economic Research shows confidence among South African consumers fell heavily in the third quarter from the second quarter. The FNB/BER consumer confidence index is based on three questions: the expected performance of the economy; the expected financial situation of households, and whether this is the right time to buy durable white and brown goods such as appliances, TVs, hi-fi systems and personal computers. The data indicates that consumers are moderately optimistic about the outlook for the South African economy and their own household finances over the next calendar year, but that households continue to remain cautious when making purchases, particularly on credit.
Meanwhile, trade figures released by SARS show the R1.98 billion deficit for August was mainly due to a decrease in exports of 9.18% and a decrease in imports of 3.76% compared to July 2009. Exports for the month were R40.38 billion and imports R42.36 billion.
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