GDP FOCUS: Consumers to still ‘feel the pinch going forward’

Hayley Parry, Money Coach at 1Life’s Truth About Money, said that consumers need a growing economy. Picture: Oupa Mokoena / Independent Newspapers

Hayley Parry, Money Coach at 1Life’s Truth About Money, said that consumers need a growing economy. Picture: Oupa Mokoena / Independent Newspapers

Published Mar 10, 2024

Share

Gross domestic product (GDP) increased by just 0.1% in the fourth quarter (Q4) of 2023 over the previous three months, narrowly avoiding a technical recession, with six out of 10 industries keeping the economy growing, data from Statistics SA revealed this past week.

The 0.1% growth was lower than the market’s forecast of 0.3%.

Brina Biggs, a senior manager at 1Life Insurance, told Business Report that the GDP data showed little surprise with the slow growth as it was in line with expectations from the Bureau of Economic Research.

“The biggest detractor of -9.7% from the agricultural, forestry and fishing department, showed the knock-on effect of an avian flu outbreak last year, hurting growth. Notable was the decreased economic activity reported for wholesale, retail and motor trade and accommodation, as well as food and beverages. Considering Q4 is our holiday and festive season, household final consumption expenditure (HFCE) increased by only 0.2%,” Biggs said.

“The increases report for durable goods and services with the main positive contributors to the increase in HFCE being expenditures on the other category, namely transport and communication. The main negative contributors were expenditures on housing, water, electricity, gas and other fuels, food and non-alcoholic beverages, clothing and footwear, as well as restaurants and hotels.

“This further highlighted how cash-strapped South Africans are, and how little room they have for manoeuvring as we navigate further increases to fuel and wait for inflation to stabilise, to see rate cuts later this year,” Biggs further added.

Hayley Parry, a Money Coach at 1Life’s Truth About Money, said consumers needed a growing economy.

Parry said, “Unfortunately, it is still not great news for consumers. Consumers need a growing economy and growth of 0.1% is not quite going to cut it. This is further compounded by the fact that tomorrow there is a massive increase in petrol and diesel prices. Consumers are still going to be feeling the pinch going forward. The cost of living is continuing to hurt, and, unfortunately, the most recent stats from Stats SA around growth in the fourth quarter of 2023 is not going to do much to help.”

She further advised, “What can consumers do in the face of this ongoing negative financial news and all these things that we keep hearing about that are going to further impact our wallet and our bank account? If you have any notches left to tighten your belt, it looks like you are going to have to be doing more of that right.

“What can you do when you are constantly facing this bearer of bad financial news? What you need to do is focus on the things you can control, when it comes to money, particularly when times are tough. Learning how to manage it better, learning how to become a pro at managing your money, bossing your budget around and getting your money to work for you rather than you working for your money. That is what happens when you get yourself a financial education. This is a learned skill just like any other but, unfortunately, most of us have never been taught it at home or at school.

“Using the pain of your empty wallet or your empty bank account to drive you towards getting yourself a financial education, figuring out how you can get out of debt and build wealth is one of the best things you can do for yourself, both now and in the future,” Parry said.

BUSINESS REPORT