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Spotlight on South Africa: Understanding the South African Consumer

 

Economically, South Africa has seen much happier days. In 2013, the nation’s GDP growth rate slumped to 1.8%, while inflation hit 6.3%. Unemployment hovers around 25%, and one in two young South Africans is now unemployed. In the World Economic Forum’s Global Competitiveness Report, 2013-14, South Africa’s macroeconomic environment ranked only 95th out of 148 countries, down from 69th the previous year. In short, more than five years after the global financial crisis struck, Africa’s largest economy is still struggling to return to its pre-crisis growth trajectory. This economic slowdown has cast a heavy cloud over the country’s retail market. In December 2013, Oxford Business Group observed that the overall trend in consumer spending “has been falling for some time and is expected to remain depressed.” It quoted an explanation from Stanlib chief economist Kevin Lings: “This largely reflects a moderation in income growth, a sharp slowdown in the growth of unsecured credit, a lack of job creation, falling consumer confidence, and a rise in the cost of living.”...

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