There's not much on the horizon to celebrate in 2019. Picture: CHRIS RATCLIFFE, BLOOMBERG, 2012 BLOOMBERG FINANCE LP
There's not much on the horizon to celebrate in 2019. Picture: CHRIS RATCLIFFE, BLOOMBERG, 2012 BLOOMBERG FINANCE LP

Not much for SA to celebrate in 2019 as financial woes continue

By Yazeed Kamaldien Time of article published Dec 31, 2018

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Cape Town - As the spark of fireworks light up the night sky to usher in the new year, economist warn even with a decreasing petrol price, there's not much on the horizon to celebrate in 2019.

Energy Minister Jeff Radebe has confirmed the petrol price would drop by R1.23 per litre on Wednesday. Diesel would also drop by R1.55 per litre.

This was because “international prices of all the petroleum products decreased”.

Dawie Roodt, chief economist at financial services company the Efficient Group, said a number of uncertainties were on the horizon though.

"And this was bound to affect the country's economic stability. It's not very pretty. The (national) budget in February will look horrible.

"We (South Africa) are so deep in financial trouble that I can't see how we will get out of it. State-owned enterprises are in debt. We have a hugely destructive government.

“The (former president Jacob) Zuma years totally destroyed this economy.

"(President Cyril) Ramaphosa is trying to fix things.” Roodt said the general elections, for which a date is yet to confirmed, “would also have an impact on the economy”.

“The run-up to the election will be bad for the economy because of uncertainty. There will be rumours and politicians making all sorts of statements, promising voters the sun, moon and stars.” As election campaigning ensues, so will debates on land expropriation, which has already had an unsettling effect on the country's political and economic stability.

Neil Roets, chief executive of Debt Rescue, one of the country's largest debt counselling companies, said talks of land grabs already have “foreign investors spooked to the point that very little foreign direct investment needed to create jobs is coming into the country”.

Coupled with a lack of incoming investments, Roets said they were now preparing for one of the “busiest periods in January, February and March in the history of the company”.

Roets said during the first months of the year they expect to “see more new clients seeking help with the repayment of their outstanding debt because of additional debts that had been stacked up during the holiday season”.

“Parents suddenly realise that they have to pay school fees that had not been budgeted for and with credit cards maxed out on luxuries in November and December many have no choice other than to seek relief by going under debt review to prevent debt collectors from seizing their property. We know from media reports that consumers spent massively over the Black Friday, Cyber Monday and over the Christmas holidays and that is going to have severely negative consequences for deeply indebted consumers.

“There is a certain kind of madness that grips consumers over the holidays where spending becomes totally irrational We in the debt counselling industry see the extremely negative results of binge shopping in the following year when we have to assist consumers to deal with the mountains of debt they had incurred.” Roodt said the second half of next year could be more economically stable “depending on the outcome of the election”.

“All of this means we won’t see growth and job creation. If you have a job, keep your job.”

The only cheerful news was that investing on the Johannesburg Stock Exchange could cough up some “bargains”.

“When there’s blood on the streets that’s the time to buy.”

Beverley Schäfer, provincial MEC for Agriculture, Economic Development and Tourism, meanwhile said there was a need to “stimulate growth and job creation” in the coming year.

“An important part of this will be ensuring that Eskom is able to provide adequate power supply in order to avoid the high economic cost of load shedding in 2019.”


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Cape Argus

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