Recession still biting but the outlook is positive – survey

2010-01-21 13:05

South Africans are still feeling the recession bite, despite a

small improvement in the economy, and it will take time for consumer spending to

rise to any degree a survey has found.

People were, nonetheless, confident about the future, according to

TNS Research Surveys, which released its Economic Confidence Index findings on


This was largely because of improved sentiment about inflation, it

said, cautioning that this confidence could be critically affected by Eskom’s

request for 35% prices hikes over the next three years.

Inflation ranging between 8% and 8.6% in the first half of last

year, dropped to 6.1% in September, and was back within the South African

Reserve Bank’s target range, at 5.8%, in November.

Confidence was also affected by improved sentiment around business

conditions and the availability of jobs.

TNS said people’s confidence in the state of the economy was key to

how they managed their finances and made, or put off, buying decisions.

It found that the recession had affected poorer people first, with

wealthier people reaching their all-time low in November.

All groups were now showing high expectations for future

improvement, suggesting a slow rise out of the doldrums in the first half of


The survey consisted of face-to-face interviews with 2000 people in

their homes in the country’s major metropolitan areas and had a margin of error

of less than 2.5%.

TNS said the results were set against a backdrop of three

successive quarterly falls in economic growth, followed by a marginal increase,

and decreasing inflation.

Real household consumption expenditure weakened in the second

quarter of 2009, and remained subdued in the second half of the year alongside

declining real disposable income and high levels of household debt despite

reduced demand for credit.

Interest rates had also recently stabilised after a steady decline

in the first half of 2009, and the fuel price had dropped.

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