The year 2017 was basically a bad year for South Africans with regards to economic wellness. Nevertheless, what is considered the forecast for the rest of 2018?
Many will have constructed a listing of budgetary resolutions for the New Year, and with suffering gross domestic product (GDP) growth rates, stagnating career development, steadily increasing numbers of unemployment and also astonishingly increased levels of earnings and prosperity inequality, all plaguing the country in the second portion of the calendar year, South African consumers may well want them.
Unemployment may increase
Unemployment has steadily increased from 4,6 million in 2011 to 5,9 million in 2016 and unfortunately, although this increase has slowed, unemployment is expected to continue to grow to 7,2 million by the end of 2018. That means, if current economic and employment trends continue, there’ll be around 1,3 million more unemployed people at the end of 2018 than there were in 2016.
Official figures show that joblessness has risen in seven of the nine provinces, with the highest rate of unemployment in Free State province and the lowest in Western Cape.
Economic growth might be heading in the right direction
GDP growth rates have fallen from 3,3 percent in 2012 to just 0,3 percent in 2016. Although GDP growth is expected to be below one percent for 2017, the central bank forecasts it will rise to 1,5 percent in 2018. While this represents a slow recovery, which is unlikely to prevent a further increase in unemployment, at least things are starting to move in the right direction.
Financial wellness to remain stable
Given the constant downgrading of economic growth expectations for 2017 and 2018, household finances will fail to recover and the financial wellness index, which takes into account seven aspects of an individual’s financial situation, is also likely to stagnate.
Financial wellness measures everything from an individual’s household material deprivation and hardship to their financial confidence and ability to plan for the longer-term. From 2011 to 2016, financial wellness rates have increased marginally – from 64,1 in 2011 to 67,3 in 2016. The figures for 2017 are yet to be released but they are expected to remain stable.
Ongoing household indebtedness
Household indebtedness in South Africa is currently at crisis levels. At least three-quarters of South African households admit to being under significant financial pressure. For the majority of households, this is down to factors they have no control over factors such as stagnating economic growth, drought and the falling value of the rand.
However, there are also many households that are under financial pressure as a result of the bad management of their finances. That includes, poor financial planning, the incorrect use of credit, high levels of indebtedness and low levels of financial literacy.