Are we heading towards a recession?
As South African investors await the release of our 2nd quarter GDP figures, there are fears that this is going to happen to Africa’s second largest economy.
Because SA’s interest rates are so low, and creditors are quick to lend money, an average of 70% of peoples’ monthly wages are spent paying off credit cards, and on daily necessities like food and clothes. Whilst many can’t afford the luxury of having a car, many people are still buying, and the repossession numbers just keep on climbing.
Talking to Sam de Freitas, the owner of Lisabank, a car repossession company, we hear that “50% of consumers applying for credit have an impaired credit record”.
“Half of credit active people cannot repay debt.”
Because of the increase in the price of fuel and electricity, many people are struggling to make ends meet, and are thus turning to using credit.
The mining sector is the backbone of South Africa’s economy, but seemingly endless striking has drastically impaired growth, especially in platinum.
South Africa is still an emerging market, and the state of our economy remains a focus. Although many believe that our drop in the first quarter was because of the mining strikes and that our growth will be positive again, it seems unlikely that we will escape the recession.
Check out what the BBC has to say.
