The economic see-saw sees businesses and consumers trying to sift through the good with the bad news that seems to hit us on a daily basis. The bad news includes:
- The impact of the increase of value-add tax to 15% – the first hike in 25 years has put a strain on the buying power of consumers as the increase is passed onto the consumer.
- Load shedding that threatens to derail festive retail profit and put a dampener on consumers who hoped to have a stress-free holiday season. According to experts the cost of load-shedding to the South African economy is becoming apparent as whole shopping malls close for hours at a time at the height of the shopping season. Whilst the bigger retailers have generators, it is the small businesses that will suffer the most as shoppers stay away during black-outs. The knock-on effect of grid-locked streets as traffic lights are down adds to the low turnout at malls as people stay away.
The good news is…
- The South African economy grew by more than expected in the third quarter by 2.2% – snapping out of its first recession in almost a decade and heralding in an economic recovery going forward.
- The Bureau of Economic Research (BER) has shown a revival in the retail sector in the last three months after a slump in the third quarter.
- A drop in the petrol and diesel price will alleviate some of the strain especially for those driving to holiday destinations.
As we head into the festive holiday season the key is balancing the bad with the good; deciding whether to trust that the New Year will bring a more positive economic trend or whether to curb spending and save for that rainy day.
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