GDP: SA consumers in for further relief – but be warned

Tandisizwe Mahlutshana, Executive of Marketing at PPS Investments.

“The encouraging GDP figure for the second quarter of 2017 which came in at 2.5% will surely help to bolster consumer confidence in South Africa, particularly after a challenging first half of the year marred by credit rating downgrades, a cabinet reshuffle and a technical recession.

With market expectations that the South African Reserve Bank (SARB) will make further interest rate cuts this year and coupled with the continuing downward trend in inflation, consumers may enjoy a welcomed relief, especially ahead of the festive season.

However, an important point for consumers to consider is that a low interest rate environment coupled with favourable inflation levels should not be taken as an opportunity to embark on spending sprees and accumulate unnecessary short-term debt. Consumers must remain cognisant of the fact that markets are cyclic and chances are that the cycle will turn at some point.

Instead, this presents an opportunity for consumers to take advantage of current market conditions by reducing short-term debt and investing any excess disposable income to build towards a stronger future financial position.”