Blog

Follow our blogs to gain insights into contemporary market research and business intelligence trends relevant to consumers and business. The blogs serve as a platform for knowledge generation and sharing for those interested in household and personal wealth, demography and population, economic and business, consumer behaviour, and youth research. The blog supports life-long learning and collective generation of solutions related to contemporary community-related challenges impacting on South African individuals, society and regulatory environments.

HOW DID CONSUMERS USE THEIR TWO-POT WITHDRAWALS?

A study conducted by the Personal Finance Research Division of the Bureau of Market Research analysed how South African consumers utilised pay-outs under the two-pot retirement system following the implementation of the policy. The research, based on data from VeriCred Credit Bureau (VCCB), SARS, the South African Reserve Bank, and Statistics South Africa, provides valuable insights into spending patterns and financial behaviour following the pay-outs. The findings reveal that a significant portion of the R43.4 billion in claims processed from 1 September 2024 to 31 January 2025 was used to settle outstanding debt and facilitate new credit purchases, particularly in the automotive sector.

Key Findings:

  • Debt repayment prioritised: Many consumers used their two-pot withdrawals to settle outstanding debts. A decline in overdue balances for clothing, furniture and general retail accounts suggests that funds were directed towards clearing financial obligations rather than discretionary spending. Overdue balances for cellular phone contracts and education loans saw an initial decline but later rose again, indicating that the withdrawals may have been used for one-time payments rather than long-term debt servicing.
  • Limited impact on savings: Analysis of banking data showed no significant increase in household savings, indicating that the funds were largely spent rather than saved. Despite the potential for additional liquidity to bolster financial security, the data suggests that consumers did not prioritise long-term savings.
  • Increase in vehicle purchases: Used car registrations spiked in September and October 2024, reaching the highest levels since the start of record-keeping in 2012. The data suggests that many consumers used their withdrawals as deposits for vehicle financing. While lower interest rates in September and November may have also played a role, the timing of the increase in used car purchases strongly aligns with the peak two-pot withdrawal periods.
  • Retail sales saw modest growth: General dealer sales rose in September and October 2024, reflecting increased consumer spending on essential goods. However, spending on clothing and furniture remained in line with seasonal trends, suggesting that withdrawals were not a major driver of discretionary purchases. Sales in other retail categories, such as clothing and furniture, showed some increases, but these may largely be attributed to Black Friday promotions rather than two-pot withdrawals.

The research indicated that the additional liquidity provided by the two-pot system was primarily allocated towards immediate consumption, debt repayment and asset acquisition rather than long-term financial security. While some consumers used their funds to manage debt responsibly, others leveraged the withdrawals to access new credit, particularly for vehicle purchases. The rise in vehicle financing debt suggests that some individuals took on new credit obligations, using the withdrawals to facilitate financing arrangements. The findings highlight the financial priorities of South African households, emphasizing the need for continued financial literacy and responsible debt management strategies. Given that the two-pot withdrawals did not lead to significant increases in savings and were primarily used for immediate financial needs, policymakers and financial institutions may need to focus on educating consumers about long-term financial planning. Encouraging responsible use of retirement savings withdrawals remains a crucial aspect of ensuring financial stability.

Click here to download the full article.

Navigating the Tide: Food Inflation in South Africa

In 2024, South Africa saw a notable slowdown in food inflation, with December recording a rate of 1.7%. Key contributors included significant price declines in staples like bread, maize meal, rice, and pasta. Egg prices even moved into deflation, with a drop of -3.0% in December 2024 from a peak inflation rate of 39.9% in November 2023.

Despite these declines, certain categories, such as vegetables (notably tomatoes and potatoes), experienced price increases due to adverse weather conditions. Early 2025, however, hints at renewed upward trends in food inflation, driven by rising costs in grains and vegetables.

Factors Likely to Drive Food Price Increases in 2025

  • Adverse Weather: Droughts, floods, and heatwaves may disrupt crop yields and livestock production.
  • Rising Fuel Prices: Contributes to higher transport and production costs.
  • Electricity Costs & Load Shedding: Increased tariffs and power outages can disrupt food production, storage, and processing.
  • Weak Exchange Rate & Imports: Weak exchange rate impacts the cost of input imports of fertilizers, animal feed, equipment, and food imports like wheat, rice, and vegetable oils.

While some relief was felt in late 2024, the increases in prices for some food items already seen in 2025 and prevailing uncertain economic conditions suggest that consumers may continue to face challenges related to food affordability in 2025.  Click here to read full article.

EXPECTATIONS OF TOP ECONOMISTS FOR THE SOUTH AFRICAN ECONOMY FOR THE FIRST HALF OF 2025

The Bureau of Market Research (BMR) and the University of South Africa (UNISA) conducted an opinion poll among 36 top economists participating in the 2024 Economist of the Year competition to gather their expectations for the first half of 2025.

Key insights from the Opinion Poll are outlined below:

Positive Outlook for Early 2025:

  • Economic improvement expected, driven by lower interest rates, reduced inflation, and stable electricity supply.
  • Growth and confidence to benefit from political stability, structural reforms, stronger fiscal control, and improved infrastructure.
  • Indicators such as a stronger Rand, reduced policy uncertainty, and potential credit rating upgrades highlight a favourable trajectory.

Persistent Challenges:

  • Major hurdles include high crime, corruption, unemployment, weak governance, and infrastructure issues in electricity, water, and logistics.
  • Economic growth is further strained by low investment, fiscal deficits, political instability, and global geopolitical tensions.

Recommendations for Growth:

  • Strengthen government-business collaboration to drive investment, job creation, and economic growth.
  • Households should reduce debt and increase savings, while the government focuses on fiscal discipline, service delivery, and pro-business reforms.
  • Accelerating structural reforms and fostering public-private partnerships are critical for sustained stability and development.

Click here to download the full article.

Mid-2024 Population Projections for South Africa

MID-2024 POPULATION PROJECTIONS FOR SOUTH AFRICA BY PROVINCE, DISTRICT MUNICIPALITY, LOCAL MUNICIPALITY, MAIN-PLACE AND SUB-PLACE

It was recently highlighted by the leader of one of the major political parties that although there are more than 40 million South Africans 18 years of age and older, only 27.79 million are registered to vote. The big question is whether this difference can be attributed to voter apathy, incorrect population estimates or a combination of both?

Population projections serve as a solid foundation to assess voting incidence and patterns in South African elections. They provide a picture of greatest likelihood of the size and distribution of the population eligible to vote, which is crucial for understanding voter turnout and engagement. From a fiscal perspective, accurate and updated population figures are essential for equitable fiscal distribution. These figures ensure that resources are allocated efficiently and fairly across various provinces based on the population’s needs. Population estimates of greatest likelihood are especially vital for setting up the National Health Insurance Fund (NHI) in South Africa. Accurate data helps in planning and distributing health resources effectively, ensuring that all areas receive adequate healthcare services based on their population size and needs.

Furthermore, businesses and marketers rely on accurate population data to make informed product and marketing decisions down to a sub-place level. Without accurate distributional figures, weak business strategies result giving rise to business losses and closures. Therefore, having reliable and granular population figures is imperative for successful business decision-making and operations.

To guide government and business in addressing these issues, the Bureau of Market Research (BMR) has recently released a report providing insights into distributional population figures configured down to a sub-place level. Dr Joshua Kembo (Senior Researcher) and Professor Carel van Aardt (Research Director) from the BMR at the University of South Africa (Unisa), published the report on population projections for South Africa by province, district municipality, local municipality, main-place, and sub-place as of mid-2024.

The report was compiled to provide strategic insights to government and business on updated population statistics by main and sub-place levels. By conducting population estimates down to such a local level of aggregation, it became clear where the population concentrations in South Africa are. Publishing population estimates at the municipal, main-place, and sub-place levels in South Africa provide valuable insights for government and business planning, resource allocation, and strategic decision-making.

The BMR estimates the total South African population as at mid-2024 to be 63.1 million people. The provincial breakdown indicates that Gauteng remains the most populous province with an estimated population of 15.4 million people (24.3%), while Northern Cape remains the least populous province with an estimated total population size of 1.4 million people (2.2%), as at mid-2024. Likewise, the percentages of the population group composition are estimated to be 81.8% for Black Africans and 2.7% for Indians/Asians at mid‐2024. Besides the cohort analyses by province and population group, the BMR report further provides population estimates by age-sex structure, with females projected to constitute 51% of the mid-2024 population. The analyses also reveal a gradually ageing population, while still maintaining a significant youth base.

Key population themes emerging from the BMR mid-2024 population estimates:

  • Higher male mortality rate: The BMR report highlights that men have a higher mortality rate compared to women. This finding has significant implications for public health planning and resource allocation, emphasising the need for targeted health interventions for men.
  • Impact of labour migration: Many smaller geographic areas in South Africa experience a lower percentage of adult men due to labour migration. This demographic trend impacts local economies and alters the demographic composition, necessitating tailored economic and social strategies for these areas.
  • Youth population trends: The base of the population pyramid, representing persons aged 0-14 years, remains broad, indicating a sustained inflow of young South Africans into the population matrix. Despite high unemployment and poverty rates, the share of the total population aged 0-14 years has experienced a slight increase. This trend presents both challenges and opportunities for job creation and economic stability, highlighting the need for targeted interventions to harness the potential of this growing demographic.
  • Ageing population: There is a noticeable increase in the older age groups, particularly those over 65 years. This segment has expanded, with a notable rise in the 65-69 age group and a stable, yet significant population, of those aged 80 years and above. The higher female representation in these older age categories highlights the need for gender-specific health and social services. The ageing population trend calls for proactive socioeconomic planning to ensure sustainable development, balancing the needs of both the youth and the elderly.
  • Workforce dynamics: The sustained yet declining youthful base indicates that while the immediate workforce replenishment is secure, the gradual ageing of the population will require strategic workforce planning. Focusing on youth skills development is crucial to offset the impending retirements of the older working-age population.
  • Social services: The broad base of the youth population and the expanding elderly segment will require diversified social services. These services need to cater to dynamic needs, such as educational resources for the young and healthcare and social support for the elderly.
  • Provincial population trends: The provincial population data reveals significant trends crucial for planning and development. Gauteng continues to grow robustly, maintaining its status as the most populous province. KwaZulu-Natal also shows consistent population growth. In contrast, the Eastern Cape and Northern Cape have experienced stable but slower growth, with the Northern Cape remaining the least populous province. The Western Cape exhibits steady growth, likely driven by economic factors. Mpumalanga and Limpopo have seen substantial growth, attributed to developing infrastructure and economic potential. These trends emphasise the need for tailored provincial policies to address specific needs and leverage opportunities, ensuring balanced and sustainable development across South Africa.

The BMR report further articulates that, of the 30 largest metropolitan and district municipalities in South Africa as of mid-2024, the Uthukela District Municipality (809 098 people) in KwaZulu-Natal Province ranked number 30, while the City of Johannesburg Metropolitan Municipality (5 761 755 people) in the Gauteng Province ranked number one. As of mid-2024, the local municipality with the largest population was Polokwane in the Limpopo Province, with 912 752 people. In contrast, the least populous local municipality was Laingsburg in the Northern Cape Province, with 9 651 people, followed closely by Khâi-Ma (11 440 people), Kamiesberg (11 939 people), and Renosterberg (12 237 people), all also located in the Northern Cape Province.

The BMR report underscores the critical role of population projections in South Africa’s strategic planning for both public and private sectors. These projections are vital for the effective provision of health and social services, emphasising the need for sector-specific planning. A key strength of the BMR report is its ability to deliver population projections at granular levels, such as main- and sub-places. This level of detail supports the development of focused and targeted interventions and marketing strategies at localised levels, essential for optimising public and private sector initiatives. The detailed projections facilitate precise resource allocation, policy formulation, and strategic planning, thereby enhancing the overall efficacy of developmental programs and initiatives.

MID-2024 POPULATION PROJECTIONS FOR SOUTH AFRICA BY PROVINCE, DISTRICT MUNICIPALITY, LOCAL MUNICIPALITY, MAIN-PLACE AND SUB-PLACE (Research Report No 532) was compiled by Dr J Kembo (BMR Senior Researcher) and Prof CJ van Aardt (BMR Research Director).

Professional enquiries:

Dr J Kembo
Senior Researcher
Population Research Division
Bureau of Market Research (Pty) Ltd
University of South Africa
joshua.kembo@bmr.co.za

Online Fatigue – A Case Study

A case study on the prevalence and potential consequences of online fatigue

The Bureau of Market Research (Pty) Ltd at the University of South Africa (Unisa) recently released the results stemming from an innovative study on online fatigue among 1 485 respondents across all nine provinces of South Africa. The study is most relevant given the increased trend of remote working as well as the tendencies of working online full-time, as well as online learning, social media usage, online buying and banking, online sales/business, video conferencing, gaming, and streaming content. Overall, the study aims to measure the prevalence of online fatigue given the greater propensity of people to work/buy/bank/learn/communicate online and to identify contributing factors leading to online fatigue in South Africa.

The salient findings of the BMR study include the following:

  • High levels of online fatigue are notable across varied types of online activities, such as online business meetings, online studies, online banking, online shopping, online entertainment, and social media.
  • The most frequently used digital devices to engage in online activities are cell phones (93.10%), followed by laptops (74.9%).
  • The widespread use of email and Internet for online activities is prevalent across all demographic cohorts.

According to Prof Deon Tustin (CEO) of the BMR study revealed the following fascinating statistics:

  • About eight in every 10 (84.6%) people use digital devices for more than four hours per day.
  • About seven in every 10 (68.9%) people are engaged in online activities for more than four hours per day.

People devote an average of about 6 hours per day on digital devices, of which an average of 5 hours per day is spent on online activities. This computation presupposes that about 83% of time devoted to digital devices are allocated to online activities.

  • On average 55 minutes are available between online commitments or engagements.
  • The average daily online presence is 60.0%
  • More than half (57.3%) of the respondents indicated that recurring online duties present them with little rest time between meetings.
  • People devote an average of about three hours of their free time per day by browsing online platforms.
  • More than eight in every 10 respondents (81.7%) confirmed that their online activities have become more strenuous over time.

According to Prof Tustin, more than eight in every ten (82.4%) people experience online fatigue due to participation in online activities. About a third of people are mostly or extremely fatigued due to their persistent involvement in online activities. When considering different personality types, it is evident from the BMR study that people who are inclined to be emotional, anxious and sceptic, are more likely to experience, or be affected by, online fatigue. In turn, self-reliant, self-disciplined, and self-driven individuals seem least likely to experience or be affected by online fatigue.

The BMR study also revealed that online fatigue has intensified over time for about six in every 10 people, with about seven in every 10 people (73.0%) at least weekly experiencing a sense of information overload while engaging in online activities. This finding confirmed that information overload constituted the leading factor contributing to digital fatigue. Of those who, weekly, feel overwhelmed, more than a quarter (27.4%) was exhausted several times a day by the sheer volume of online notifications and messages. Likewise, for about half of the people, online fatigue has a negative impact on their productivity. Furthermore, 80.5% of respondents confirmed that they, to a varied extent, feel emotionally drained after spending time online. About seven in every 10 respondents (71.8%) felt irritated after spending time online. The BMR study also revealed that social media platforms can contribute to feelings of fatigue through FOMO (fear of missing out), and the pressure to constantly curate and share content.

The BMR study shows that people with a high propensity to participate in online activities are at risk of experiencing online fatigue, often being associated with heightened cognitive and psychological stress, exhaustion, and burnout. Prof Tustin stressed that full-time employed, remote workers and telecommuters, females and young adults (18 – 25 years) are at a higher risk level of experiencing digital fatigue and that online fatigue conditions require sound planning and strategizing to create a better balance between on- and offline activities in support of a healthy work and personal life balance, digital well-being, productivity, job satisfaction and time management.  Overall, the BMR study underscores the value of business intelligence regarding the online fatigue phenomenon, which serves to guide future online work management policies and strategies aimed at enhancing employee well-being and a healthy work-life balance.

The BMR research report entitled “A case study on the prevalence and potential consequences of online fatigue” is available from the Bureau of Market Research.

Professional enquiries:                                                                  

Prof DH Tustin
Chief Executive Officer (CEO)
Bureau of Market Research (Pty) Ltd
University of South Africa
deon.tustin@bmr.co.za
072 672 9153

Economists more positive about 2024 economic outcomes

ECONOMIST OF THE YEAR CONSENSUS FORECASTS – JUNE 2024

The 2024 Economist of the Year competition hosted by the Bureau of Market Research and the University of South Africa is currently in full swing with 36 of South Africa’s top economists participating in the competition. The participating economists recently completed their June 2024 forecasts being displayed in the table below.

When comparing the June 2023 and 2024 forecasts the economists seem more positive about the 2024 economic outcomes than they were with respect to 2023. Of note is that the predicted Gross Domestic Product (GDP) growth rate for June 2024 is more than three times as high as the June 2023 forecast. The 2024 GDP growth rate forecast is also anticipated to be 67% higher than the actual 2023 GDP growth rate. This reveals a high level of optimism and expectation that economic growth during 2024 will be markedly higher than that of 2023.

The participating economists during June 2024 also showed a lower expectation with respect to Consumer Price Inflation (CPI) outcomes when compared to June 2023. This is especially significant as this forecast places the 2024 CPI outcome within the SA Reserve Bank CPI target range of three to six percent, while the 2023 forecast was at the top of this range. South African consumers should welcome the fact that the participating economists forecasted during June 2024 that there will be a 50-basis point cut in the SARB Repurchase rate during 2024, which will bring some relief to indebted consumers.

When it comes to household consumption expenditure, the participating economists produced a less up-beat forecast during June 2024 than 12 months ago. This is a clear indication that the household sector is still under financial strain, despite the anticipated improvement in GDP growth, lower inflation and lower prime interest rates for 2024.

Overall, the consensus forecasts of the participating economists have been stable over the first five months of 2024. This suggest that, despite the elections and the uncertainty thereof, the domestic economy and the international economy (affecting the oil price, exchange rate and the long-term yields on government bonds) have not been subject to any significant shocks this year.

The BMR is eagerly awaiting the 2024 actual economic outcome results to determine whether the better forecast outcomes for June 2024 (as compared to June 2023) provide an accurate estimate of 2024 economic outcomes and that the increased optimism of the participating economists is warranted.

To view participating economists’ monthly forecasts, click here>


Professional enquiries:

Prof CJ van Aardt
Research Director
Bureau of Market Research (Pty) Ltd
University of South Africa
carel.vanaardt@bmr.co.za
082 950 4325

ANNOUNCEMENT OF THE TOP ECONOMISTS OF THE 2023 BMR/UNISA ECONOMIST OF THE YEAR COMPETITION

The Bureau of Market Research (Pty) Ltd (BMR) and the University of South Africa (Unisa) has been hosting the Economist of the Year Competition since 2022. The winner and two runners-up of the 2023 BMR/Unisa Economist of the Year competition were announced at an awards ceremony held in Pretoria on 20 June 2024.

The winner of the 2023 competition is Ms Elize Kruger, an independent economist. Ms Kruger has nearly three decades of experience in both macro and microeconomic analyses and forecasts. She has worked in the financial, health, transport and energy sectors. As an independent economist, she provides consulting services to a wide variety of clients, compiling forecasts of key macroeconomic indicators and publishing in-depth reports, while also delivering frequent media commentary and research briefs on important economic events. Although Ms Kruger has participated in the competition for several years, this is her first time winning the competition after she was a runner-up in the 2022 competition.

The two runners-up, in alphabetical order, of the 2023 competition are Mr Dawie Klopper, a financial advisor and investment economist at PSG Wealth and Mr Jee-A van der Linde, a senior economist at Oxford Economics Africa.

Overall, the three top economists provided the most accurate and consistent forecasts for eight economic variables during 2023.  Given that more than thirty of South Africa’s top economists participated in the competition, the accuracy with which the top three economist predicted 2023 economic outcomes should be applauded.  The competition is subject to an adjudication process whereby the winner is determined through a formula that has remained unchanged since the competition’s inception.

Watch full event

Enquiries on the 2023 competition outcome:

Ms J Meiring
Senior Researcher
Personal Finance Research Division
Bureau of Market Research (Pty) Ltd

Jacolize.meiring@bmr.co.za
Cell:  082 354 5777

Enquiries on the trends underlying the 2023 forecasts:

Prof CJ van Aardt
Research Director
Market Intelligence Research Division
Bureau of Market Research (Pty) Ltd

Carel.vanaardt@bmr.co.za
Cell:  082 950 4325

 

South African Employment Report highlights the need for reskilling the labour force

The latest official unemployment rate in South Africa is recorded as 32.9%, painting a worrying scenario, with youth aged between 15 and 34 years continuing to have the highest unemployment rate (45.5%), with little hope for better jobs. Approximately 3.6 million out of 10.3 million young people aged 15-24 years were not in employment, education or training.

The 2024 UASA South African Employment Report (SAER) and 2nd UASA/BMR Employment Index (EI) elaborate on the various economic challenges South Africa faces and the upside opportunities to grow and improve the labour market. The analysis focuses on current labour market issues underlying the challenges of low job creation and high unemployment levels in South Africa.

When it comes to the employment dynamics of any labour market, it is important to recognise that labour demand is never static – it is continuously changing. Jobs which are in high demand or supply at present will not necessarily be in high demand or supply in future. Furthermore, employment and unemployment magnitudes are continuously changing, driven by a host of macro-, meso- and microeconomic factors.

The UASA/BMR Employment Index (EI) was developed to track the employment performance of the South African economy over time. This index provides views in terms of an overall employment index as well as various sub-indices. The overall UASA/BMR EI is a function of five employment sub-indices, namely:

  • Employment growth, as a labour demand indicator.
  • Production elasticity of employment, as an indicator of the strength of the relationship between GDP growth and employment creation.
  • Growth in unemployment (expanded definition), as an indicator of the growth in the number of economically active people who are jobless.
  • The quality of labour supply (as proxied by highest educational status), as an indicator of growth in the value of human capital locked in the economic active population.
  • Compensation growth, as an indicator of employment-related income growth.

The South African Employment Index (EI) recorded some, although sub-optimal, improvements during the period Q1 2008 to Q4 2018. A host of factors, including load shedding, low economic growth, corruption, sovereign investment grade downgrades and COVID-19, negatively impacted the employment performance of South Africa since Q1 2019, with some improvement during the period Q3 2021 to Q4 2022, whereafter it deteriorated again. It is expected that the overall employment index will decline even further during 2024.

The report also discusses the influence of 4IR on the future of the South African labour market, particularly in the realms of digitalisation, artificial intelligence, and machine learning. Research has shown consistently that the number of employment opportunities is strongly positively correlated with technological advancements while each industrial revolution brought about a huge additional spurt in employment worldwide. It has been estimated that more than 85% of employment growth over the past 80 years can be explained by the evolution of technology which has been responsible for creating new jobs. It was pointed out that employees are generally not equipped to fully adapt to the job changes brought about by the 4IR, and that this hampers the potential for efficiencies, product development, market penetration, sales, businesses, and the broader economy in the country. It is expected that over the longer term, 4IR will negatively impact not only lower-level skilled jobs in South Africa but also higher-skilled jobs such as accounting, finance, law, management, and entertainment. The World Economic Forum (2023) stated that close to half of the world’s working population will need to adapt their core skills over the next five years to adapt to technological changes, highlighting the need for reskilling the labour force.

Among other key factors, the economic outlook and technological changes underscore the necessity of reskilling the labour force. The BMR’s research outcomes reveal that South Africa continues to grapple with numerous acute labour market challenges, including:

  • Low job creation rates result from, among other things, slow economic growth, a lack of elasticity in the relationship between employment and economic growth, and low skill levels among those who are actively seeking employment.
  • The labour market’s limited capacity to absorb the unemployed is due to low economic growth rates, low elasticity levels between employment and economic growth, potential employers’ preference for capital over labour, an inflexible labour market, and the low skill levels of the population actively seeking work.
  • Low growth in real compensation results from low levels of entrepreneurship, the economy’s incapacity to absorb the unemployed, and poor job creation, all of which contribute to high rates of inequality and poverty.
  • A large number of positions that non-tertiary qualified workers would typically fill are instead occupied by those with a tertiary-level education, resulting in a less-than-ideal level of non-tertiary qualified worker absorption into the labour market. This is because there is a mismatch between the labour supply and demand regarding skill quality and skill mix.

Several labour policy initiatives to resolve these labour market issues have not always yielded the best results because these initiatives fail to closely follow various labour market policies that many other developing countries have successfully adopted. The government’s role in fostering sustainable economic growth and employment creation cannot be overstated, nor can it be separated from the importance of infrastructure development and maintenance and the effective delivery of high-quality services. It is crucial for all stakeholders to understand and actively support the local economy to promote economic growth and, as a result, promote job creation.

Click here to download the full report.

EXPECTATIONS FOR SOUTH AFRICA’S ECONOMIC PERFORMANCE DURING 2024

EXPECTATIONS FOR SOUTH AFRICA’S ECONOMIC PERFORMANCE DURING 2024

Author: Prof Carel van Aardt (Research Director: Market Intelligence Research Division)

THE GOOD, THE BAD AND THE UGLY

There is a broad consensus regarding 2024 economic outcomes, although top economists differ regarding the exact numbers and percentages. Some of the main expectations can broadly be classified into three categories, namely the good, the bad and the ugly.

The good – improved performance or outcomes are expected for:

Higher level of economic growth; Higher level of household consumption expenditure growth; Lower levels of inflation; Lower interest rates & Increase in the number of employed individuals.

The bad – weaker performance or outcomes are expected for:

Higher unemployment rates; Higher government debt to GDP ratio; Increased policy uncertainty due to the national elections in 2024; Growth in the number of downside risks and/or structural constraints to economic growth & Declining levels of foreign and local investor confidence.

The ugly – negative outcomes over the long-term are expected for:

High incidence of income inequality and poverty; Deterioration in physical infrastructure; Negative sovereign investment ratings by the major international ratings agencies; Continued loadshedding & Increased pessimism and socio-political instability.

The implication of these expectations for businesses is that 2024 is anticipated to be a very challenging year on the economic, political and social fronts, with some relief expected in the form of lower inflation and interest rates and some growth in household consumption expenditure and compensation.

In the News

State of the Nation Address 2024 (Source: Parliament)
  • Main themes which dominated the annual SoNA included crime and corruption, youth unemployment, loadshedding, the controversial Nation Health Insurance bill and the extension of social grants.
  • President Ramaphosa’s SoNA 2024 highlighted both achievements and challenges, emphasizing the need for continued efforts to build a stronger, more inclusive South Africa.
National Budget (Source: National Treasury)
  • National Treasury will be utilizing R150 billion of the R500 billion from the Gold & Foreign Exchange Contingency Reserve Account (GFECRA) to pay off the national debt.
  • No hikes to income taxes, VAT or fuel and accident levies.
  • No inflation adjustments to the personal income tax tables and medical tax credits.
  • Social grants will receive inflation-linked increases.
Take Home Pay (Source: BankservAfrica)
  • Average real take-home pay of salary earners in South Africa increased by 3.5% year-on-year in January 2024, suggesting significant ongoing erosion in the purchasing power of salary earners.
  • The average real take-home pay was recorded at R13 968 in January 2024.
International growth expectations for 2024 (Source: OECD)
  • Global: 2.9%
  • US: 2.1%
  • Euro Area: 0.6%
  • G20: 2.9%
  • China: 4.7%
  • Concerns about disruptions in global trade, with sharp delays and some 100% cost increases following attacks in the Red Sea. Beside shipping problems, the rise of serious geopolitical tensions is a significant risk to trade and inflation, with the conflict in the Middle East threatening the stability of energy markets.
Social Media (Source: DataReportal)
  • Ranked by number of monthly active users, Facebook, YouTube, WhatsApp, Instagram and TikTok were rated the most popular social networks worldwide as of January 2024.
  • There were 45.34 million internet users in South Africa at the start of 2024, of which 57.3% used at least one social media platform in January 2024.

CONSUMER FINANCIAL VULNERABILITY INDEX: Q3 2023

Structural factors to keep consumer finances fragile

Cyclical factors kept consumer finances in a fragile state, with structural factors becoming main risks to consumer finances in the third quarter of 2023 (Q3 2023).  Key consumer informants identified structural impediments such as a) political instability and corruption; b) the well-known triad of unemployment, poverty, and inequality; in addition to c) loadshedding as key risks to building on the improvement in the state of consumer finances which occurred in the third quarter of 2023 (Q3 2023). The CFVI increased to 50.9 points in Q3 2023 from 49.3 points in Q2 2023, mainly due to a more upbeat cyclical economic environment, driven by encouraging CPI, interest rate and income earning developments.

The CFVI as measured from the views of consumer key informants who deal with consumers daily increased to 50.9 points in Q3 2023 from 49.3 points in Q2 2023 and 49.7 points a year ago.  This deemed consumers to be less financially vulnerable in Q3 2023, although still in despair.

The improvement in the CFVI and its four sub-indices was driven by an increase in consumers’ access to an income via both employment and transfers from family and friends. This had a positive domino-effect on the other three subcomponents. Although consumers still limited their purchases, the better income combined with lower CPI contributed to an improvement in the expenditure index as they were better able to afford their expenses. Likewise, combined with stable interest rates, the higher income improved consumers’ ability to service their debt, though they were still vulnerable in this department. Similarly, the improved access to more income, combined with being better able to afford expenses and debt service costs, created room for emergencies saving. However, consumers were not yet in a position to contribute more to retirement savings, causing the saving index to remain below 50 points.

Economic and consumer finance outlook

A mixed economic and personal finance outlook for Q4 2023 was revealed. Consumer key informants are still overwhelmingly negative, but their outlook for CPI and consumer finances improved compared to Q3 2023, while they were most negative on the global economic outlook. The following were the majority views for Q4 2023:

  • 4% expect consumer finances to remain at the current vulnerable level or worsen.
  • 9% anticipate general prices to increase, whether at the same rate or a slightly slower pace.
  • Around 82% expect the global and domestic economic situation to remain the same or worsen.
  • 1% foresee an unchanged or worsening unemployment situation.

When the effect of cyclical factors on consumer finances subsides, structural factors normally re-emerge as the biggest risks. This is confirmed by the risks expected to exercise the biggest pressure on consumer finances in Q4 2023 – as indicated by chart 2. Persistent unemployment, poverty, and inequality and continuous loadshedding are expected to be the highest risks to consumer finances in Q4 2023. Although another structural risk, political instability and corruption, moved down to the fourth highest risk, this should be viewed in context. It is a relative issue – its risk measurement was at the exact same level as in Q2 2023, but other factors are expected to become even higher risks in Q4 2023.

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