Salaried middle class consumers are experiencing a recovery of their financial positions due to the lower interest rates and relaxation of lockdown levels. Photo: Pixabay
Salaried middle class consumers are experiencing a recovery of their financial positions due to the lower interest rates and relaxation of lockdown levels. Photo: Pixabay

Middle class consumers experiencing a recovery to financial positions in SA

By Edward West Time of article published Sep 17, 2020

Share this article:

CAPE TOWN - Salaried middle class consumers are experiencing a recovery of their financial positions due to the lower interest rates and relaxation of lockdown levels, according to trends FNB’s Retail and Private Banking customers.

The financial position of these of the bank’s customers - who earn monthly incomes of R10 000-R60 000 per month - was now on par with levels recorded in February 2020, before the national lockdown was implemented, a statement from the bank said yesterday (wed).

Additionally, spending patterns of these consumers were recovering, with most categories like groceries and entertainment back to normal, except categories like travel that were still significantly lower due to the travel bans instituted during lockdown.

However, average income among informally employed and self-employed consumers continues to lag, and as a result, this income group might take longer to regain their usual average income levels, the bank said.

FNB Retail and Private Banking chief executive Raj Makanjee said the lockdown had been the toughest experience for consumers, emotionally and financially.

However, the income recovery and improving cash flow among middle-income consumers boded well for the economy as middle-class consumers had significant spending power.

“The timely adjustment of interest rates has been instrumental in cushioning consumers who are servicing debt against severe financial difficulty. Similarly, our cashflow relief measures have allowed our customers who earned partial or no income during lockdown levels 4 and 5, to manage the impact of this difficult period on their finances,” Makanjee said.

According to FNB, the average income of consumers employed by SMEs (employing less than 10 people) was impacted the most over the course of lockdown.

The bank estimated that one in two of people employed by these SME businesses had seen a drop of at least 15 percent in average income.

However, only one in five of those employed by larger companies (1000 employees or more) experienced an average income drop of 15 percent or more.

FNB said however that while the income recovery trend was encouraging, it was aware that consumers continue to face difficulties as Covid-19 is still part of everyday reality.

As a result, it would continue to avail its resources and platform to help customers with money management across its retail and private banking areas.

Investec chief economist Annabel Bishop said Tuesday in a note they continued to expect that the economy would only return to its 2019 level of activity in nominal terms in 2023, and in real terms in 2020. International ratings agency Moody's said it expected a recovery in economic activity in the second half of 2020 in South Africa, however, the economy would not return to the 2019 levels of economic activity until 2023.

BUSINESS REPORT

Share this article:

Related Articles