An economic forecast into 2014
Change is the only constant factor in life, and it would seem that the only change we are going to have, is the change in our pockets as we get poorer this year.
This is according to Derek Fox, speaking on behalf of the Boksburg Chamber of Commerce, in light of what is economically expected for South Africa in 2014.
“This year is setting to be a difficult year, financially tempered slightly by the growth overseas in some of our major trading partners, which should serve to soften the blow slightly.
“However, the Rand is under pressure as investors in brand South Africa have taken their profits and run,” says Fox.
“This affects the petrol price and all other commodities and services.
“Spending over the festive season was subdued by many retailers recording single figure growth. Even some of the bigger malls only showed a slight, but negligible increase in visitors to the mall.”
Accoridng to him, a major computer and electronic goods company at the East Rand Mall had a year-on-year decline of 24 per cent.
“This talks to the sluggish economy and the unwillingness of consumers to spend, or perhaps their inability to spend, as the debt to free cash ratio of consumers remains high at 75 per cent.
“This means consumers are spending 75 per cent of their disposable income on servicing debt.”
According to Fox, the latest increase in the repo rate by 50 basis points or 0.5 per cent, will have a further knock on effect, even though consumers had the benefit of the lowest rates since 1974.
Despite the low rate, citizens were able to take advantage of this.
“The full effect of the electricity price hikes are now being felt, along with the the rapidly rising fuel price and of course the E-tolls will make the overburdened consumer even more reluctant to spend, which will impact on businesses and business confidence.”
Fox says the silver lining can be that there are green shoots of growth starting to appear in the US and UK economies, which he hopes will filter into SA’s economy within a six-month period.
“The Chinese economy is interestingly slowing down, which is positive and negative. Positive in the sense that the Chinese demand for fuel will be reduced if their economy cools, which should bring the price per barrel of oil down, and with this the petrol price.
“There will, however, be a negative impact on the world economy.”
Fox says the Boksburg Chamber of Commerce sees service delivery protest increasing this year as infrastructure crumbles at an alarming rate, due to a lack of maintenance.
“Labour unrest will also continue, as people fight to stay ahead of the rapidly rising cost of living.
“The standoff between the labour and business (market) too, will continue as embattled businesses don’t have the resources to increase wages due to nearly absent demand from consumers,” concludes Fox.
If any Boksburg businesses are interested in being a part of the Chamber of Commerce, they may contact Esther on 011 892 0222.
