Consumers urged to budget for more tough times
SOUTH Africans are urged to tighten their belts or face a tough ride ahead, as the country grapples with the effects of a technical recession.
Economist Dawie Roodt said he was certain that most employers will not be increasing salaries, as they will be taking strain themselves.
“In fact, some will be forced to retrench staff, to cut down on the salary bill.”
Roodt urged households to draw up a financial plan to help achieve their goals without borrowing and making impulsive decisions.
“Write down what you intend to achieve with your income. Stick with the budget.”
He said those employed in small businesses were at a greater risk of losing their jobs. “The demand for goods has declined. This would mean a high probability for job shedding as companies are not making profit.”
Roodt warned South Africa will plummet deeper into a quagmire especially since the debate around expropriation of land without compensation has intensified. “Investors want certainty. They want assurance that their money and property is safe, and won’t be taken away.”
Economist Thabi Leoka agreed the technical recession would make it harder for business to thrive and posed a major threat to jobs.
“Consumers are not spending. There is a contraction in investment and imports, and there is a slower demand for goods. This means higher unemployment.”
Leoka explained that the term “technical” was used because South Africa experienced two consecutive quarters of negative growth. She said the contraction of the economy was a surprise. “I thought we would see a slight improvement of about 0,3%. A contraction was not expected by most economists.”
She said there needed to be policy certainty. “Government needs to communicate its policies very clearly. The failure of implementing the National Development Plan has lead to where we are now.”
Meanwhile, Neil Roets, chief executive of one of the largest debt counselling companies, said handing over the management of your debt, growing your own food, earning forex rather than Rand and shedding the wants required by status were all ways of surviving recession.
“The most important place to start is with a budget. Look at your bank statements for three months.
“This will reveal where money is being spent and where cuts could be made.”
Roets said more than half of consumers were three months or more in arrears with their repayments and this figure was expected to keep climbing as South Africans were getting deeper and deeper in debt. “What is deeply disturbing is the fact that the overwhelming majority of our clients have little or no hope that things will improve any time soon.”