South African Consumer Confidence Rebounds to Pre-Pandemic Levels
TLDR
- South African consumer confidence reaches pre-pandemic levels in Q3 2021, driven by increased optimism.
- Consumer sentiment index improves to -5 in September, highest since early 2019.
- Positive factors such as broad governing coalition, improved electricity, lower inflation, and stronger rand contribute to higher confidence levels.
South African consumer confidence surged to pre-pandemic levels in the third quarter of the year, with increased optimism about personal finances driving the trend.
A quarterly index measuring consumer sentiment, compiled by FirstRand’s First National Bank and Stellenbosch University’s Bureau for Economic Research, improved to -5 in the three months ending September, up from -10 in the previous quarter. This marked the highest reading since early 2019.
Several positive developments have boosted the confidence of more affluent consumers, according to FNB Chief Economist Mamello Matikinca-Ngwenya, including the formation of a broad governing coalition after the May 29 elections, improved electricity supplies, lower inflation, and a stronger rand.
Points clés à retenir
Investor sentiment strengthened after the African National Congress formed a coalition with centrist rivals, avoiding an alliance with the more left-leaning Economic Freedom Fighters. The rand has since stabilized at levels below 18 rand to the dollar. The survey's household finances sub-index rose to 14 from 8 in the previous quarter, signaling increased consumer willingness to spend, especially among higher-income households earning more than 20,000 rand per month. A change in law allowing early withdrawals from pension funds also contributed to financial confidence. The economic outlook sub-index also improved for the third consecutive quarter, amid slowing inflation, which is expected to lead to an interest rate cut by the South African Reserve Bank later this week.
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