CONSUMER SPENDING TO REMAIN HEALTHY, PREDICTS NKC AFRICAN ECONOMICS

SOUTH Africa’s economic recovery will be a lengthy process, but prospects look better on the consumer spending front, according to a research report released yesterday by NKC African Economics. Economic activity surprised to the upside in the first half of 2021, with industrial production in particular boosted by positive manufacturing and mining quarterly growth. “The fragilities of the South African economy were on full display as it endured a severe contraction in 2020. This year, the economy had a better-than-expected start, but strap in as the recovery process will be a lengthy one,” said NKC African Economics senior economist Pieter du Preez. He said the financial services sector had also accelerated in the first half. He forecast gross domestic product growth for 2021 at 4.3 percent, assuming also the effects of a third wave of the pandemic, the severity of which would matter going forward. He said consumer spending growth in South Africa was expected to remain healthy over the next five years, despite local economic fragilities. “Specifically, growth in nominal US dollar denominated consumer spending in Johannesburg and Cape Town is forecast to average close to 8 percent per annum over the next five years. Consumer price index inflation will continue to rise over the short term as Brent crude prices average higher than last year, while electricity prices are also expected to jump by more than 15 percent in July,” said Du Preez.

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