When economies struggle, it’s always a rocky and uncertain financial ride for the consumers on the front lines. With the news that S&P has downgraded South Africa’s credit rating to junk status comes just another reason why 2017 might be feeling as if it’s the downright worst for everyday South Africans who are already struggling to make ends meet.
Facing potential political upheaval, an economy skirting perilously on the edge of recession and a whole host of other financially destabilising factors (in an increasingly uncertain global system) this year the population are really feeling it where it hurts – in the pocket.
Why are South Africans feeling poorer?
There is a huge array of factors at play when it comes to explaining why South Africans are likely to be finding 2017 especially challenging financially. In fact, the problems are so numerous and interrelated, it’s easy to see why many are concerned that there’s simply no fixing the South African economy.
Food inflation is already running high in the country, reaching an eye-watering 19% in March 2017 which seriously “ate” into how well off the average South African in the street was feeling. Although this figure is predicted to drop to single digits over the course of the year, the high rate has already taken its toll, particularly combined with other pressures.
These other pressures include high petrol prices which are continuing to rise as the Rand continues to depreciate against the Dollar. On 3rd May 2017, petrol prices rose by 49 cents per litre, affecting both consumers individually and the economy at large. Adding to this list of rising costs, energy bill hikes are placing additional burdens on households, while interest rate increases by the SA Reserve Bank (SARB) put further pressure on everybody.
The big picture
Bigger picture issues such as slower than predicted economic growth (which isn’t keeping pace with population growth) go some way towards explaining why South Africans are feeling poorer. Lack of confidence in the country and its Government are also causing the nation’s currency to haemorrhage value, increasing the price of imported goods and the wider cost of living.
But it’s not just the economic output and political uncertainty in South Africa which are proving problematic for South African pockets. There are a number of deep-rooted and unaddressed internal problems in the country which are having an impact.
The Government and the finance sector have failed to develop financial products which are accessible and appropriate for poorer citizens (currently 30% of the population doesn’t have a bank account). They have also failed to develop a system of financial education to help tackle the country’s sky high levels of debt and tp nurture responsible finance users. All this in a sector where South African loan providers like Wonga are investing in building financial education resources. Is it any wonder that 2017 is feeling financially gruelling?
Are you finding 2017 especially challenging financially? Do you have any tips for budgeting? Share your ideas and experiences below.