South African consumer mood slumps on ‘grim economic reality’
South African consumer confidence fell to the lowest level in more than two years in the first quarter and is likely to deteriorate even more as the novel coronavirus disrupts domestic and global economic output.
A quarterly index measuring consumer confidence fell to -9 from -7 in the three months ended December, FirstRand Ltd.’s First National Bank said in an emailed statement Monday. That’s the lowest since the third quarter of 2017. The median estimate of four economists in a Bloomberg survey was for -10.
KEY INSIGHTS
South Africa declared a national state of disaster Sunday and is planning fiscal measures to support its economy. That’s despite the budget gap forecast to reach the highest level in almost three decades and the government’s plans to trim spending and rein in the public sector wage bill.
Measures to limit the spread of the disease that include a travel ban and port closures are likely to disrupt economic activity and further depress the outlook of consumers. Confidence levels among high-income households plunged to a 20-year low, which is reflective of South Africa’s “grim economic reality,” while low-income earners remained resilient, said FNB chief economist Mamello Matikinca-Ngwenya.
A sub-index measuring the appropriate time to buy durable goods plunged to lowest in almost 34 years, signaling that consumers will delay purchases of vehicles, furniture and household appliances. Local retailers are set for another difficult year as weak consumer demand will continue to affect sales volumes and retail selling prices, said Matikinca-Ngwenya.
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