SOUTH AFRICAN CONSUMER
CONFIDENCE NEAR BEST SINCE
2007 AS RECESSION ENDS
S
outh African consumer confidence was little changed in
the third quarter, close to the highest since the last three
months of 2007, as Africa’s biggest economy pulls itself out
of recession.
As highlighted by the First National Bank and the Bureau
for Economic Research’s websites, the consumer confidence index rose to 15 from 14 in the previous three
months this quarter.
Consumer spending, which accounts for two-thirds of expenditure in the economy, has been slow to recover from
last year’s recession as companies such as Seardel Investment Corp, the country’s biggest clothing and textile-maker, cut jobs. The Reserve Bank reduced its benchmark interest rate by half a percentage point to 6 percent on Sept. 9,
the eighth reduction since December 2008, to help spur
spending.
According to First National Bank’s Chief Economist Cees
Bruggemans consumer spending is likely to continue growing strongly in the near-term future thanks to rising incomes,
this relatively high level of consumer confidence and the
boost to real purchasing power that the fall in inflation
provided.
Inflation eased to an annual 3.7 percent in July, the slowest pace in more than four years, the statistics office said
on Aug. 25.
Confidence among high-income earners, who earn more
than 10,000 rand a month, improved as they rated it a
good time to buy durable goods, such as TVs and furniture.
Retailers are expanding to take advantage of a recovery in
consumer spending.
A boost in spending may help to spur economic growth,
which slowed to an annualized 3.2 percent in the second
quarter from 4.6 percent in the previous three months. The
Reserve Bank expects the economy to expand 2.8 percent
in 2010.
Source: Bloomberg
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