Advertise with fastmoving.co.za
 
 

South African consumers face more pain from potential global trade wars and fuel increases.
South African consumers face more pain from potential global trade wars and fuel increases.

Trade wars turn up the heat on local consumers

ECONOMIC NEWS

By Sunita Menon - Jul 11th 2018, 09:24

South African consumers face more pain from potential global trade wars and fuel increases, global payments company Mastercard said in a statement. 

The retail sector has been flailing in recent months, with consumers feeling the strain of VAT increases and three consecutive months of fuel price increases.

Consumer spending accounts for more than 60% of GDP. The economy is still reeling from a weak first quarter in which the sector contributed significantly to the decline.

"It’s brutal. The ongoing fuel price hikes is the number one risk to global growth, but the global trade wars are SA’s biggest macroeconomic concern. Consumers need to watch this closely," said Mastercard senior vice-president of market insights, Sarah Quinlan.

SA imports most of its petroleum products from abroad at prevailing global prices and exchange rates.

"If consumers spend more on transport, they will have less to spend on any discretionary items," said Old Mutual Multi-Managers chief investment strategist Dave Mohr.

As tensions rise between major trading partners China and the US, with ripple effects globally, the cost of living is expected to go up significantly.

"We know that we have some challenges in global trade that have been introduced into the global economy. Unfortunately for the South African market, which is heavily export-dependent, this will take a serious knock," Quinlan said.

Added to this, while China was once more open to importing SA goods, the country is now focusing on its domestic market.

"China has made a conscious decision to domestically focus their economic growth, so SA really needs to focus on diversification and stop relying on imports," said Quinlan.

This was made clear by SA’s current account deficit, which widened in the first quarter as exports fell dramatically.

"The sharp fall in exports shows that SA truly has a structural problem," said Citibank economist Gina Schoeman.

Business confidence also plummeted to levels last seen nine months ago on the back of a weaker rand and slower retail sales. The risk of a global trade war had alerted certain industries in SA, who had indicated it would affect industry and employment negatively, according to the South African Chamber of Commerce and Industry’s business confidence index.
Business Live 

Related News

Consumers relying more on credit to survive
26/06/2019 - 08:38
Consumers are increasingly relying on their credit cards and personal loans for daily survival, the latest statistics from one of the major credit bureaus reveal.

SA’s growth prospects pick up a little in April
25/06/2019 - 14:26
The Reserve Bank’s leading indicator signals activity increased slightly in April from March, with more building plans approved and more jobs advertised.

Pick n Pay and FoodForward SA aim for 2 million meals with Mandela Day Food Drive
25/06/2019 - 12:57
Pick n Pay and FoodForward SA have launched their third annual Mandela Day Food Drive and invite all South Africans to contribute towards the ambitious goal of collecting 500 tonnes of food – enough to produce two million meals.

Laying the groundwork for SA's emerging farmers
20/06/2019 - 14:27
Smallholder farmers have called on the government to address issues bedevilling the sector to grow the embattled economy. Specifically, they want Thoko Didiza, minister of the newly reconfigured agriculture, land reform & rural development department, to champion their struggles.

Inflation accelerates slightly in May
19/06/2019 - 11:24
Inflation accelerated slightly to 4.5% in May, giving impetus to calls for an interest cut in July.