Negative global and domestic shocks slow the South African economy
Households: Consumption expenditure by households has been one of the key drivers of the South African economy’s recovery from the Covid-19-induced recession. Although household consumption is expected to remain a key driver for growth, this is expected to be at a lesser extent than during the period of recovery post the 2020 recession. Factors such as the rapidly rising cost of living, rising interest rates and lower asset prices are already having a negative impact on consumer spending.
Employment: Despite South Africa’s unemployment rate remaining stubbornly high, it moderated between the end of 2021 and the second quarter of 2022. Job creation has somewhat picked up due to the ongoing recovery of more labor-intensive sectors such as trade, tourism and transport.
Consumer confidence: Still below the neutral level, South Africa’s consumer confidence index improved slightly in the third quarter of 2022 after its deep contraction in the second quarter. The overall picture painted by the consumer confidence index, however, suggests a marked deceleration in consumer spending, particularly relative to the strong growth rates at the start of 2022.
South African commodity exports: The weakening global economy has, to an extent, dampened the prices of South Africa’s important export commodities - the exception has been coal, as its price has surged alongside that of oil prices.
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