Is South Africa turning the corner in 2017?
The year 2016 was a difficult year for South Africa. The end of the commodity boom had a negative impact on emerging markets and especially commodity exporters. South Africa grew by only 0.3% in 2016, the lowest since the 2009 recession. From a macro perspective, the relative appreciation of commodity prices going into 2017 may help economies like South Africa turn the corner. The World Bank is forecasting lower inflation this year which should be good news for households especially low to mid income households where food is usually the largest expense.
For our first release of the year, the KIC Score in South Africa rose to a high of +22 from +9 in December. The current economic condition metric jumped from -29 to -12, a 17 points increase over December. Meanwhile, the economic expectations metric rose as well to reach +35 from +21, a 14 point increase. Compared the other countries in the KIC Score, residents in South Africa are now the most optimistic about the future economic prospects while they remain cautiously optimistic on current economic state.
President Jacob Zuma is scheduled to address the parliament today amidst anger and protests over scandals and poor economic performance during his term. The World Bank is expecting the growth to strengthen to 1.1% in 2017, mostly driven by commodity recovering and better supply of electricity.
Despite the overall optimism about the economic prospects, residents in South Africa are not yet ready to buy, the willingness to buy metric seating at +4 while the willingness to spend more remains negative at -40.
KASI KIC Score’s 598 sample survey of individuals in Johannesburg was carried out between January 13 – 28 of this year, and was conducted online.
Trudi Makhaya, economic advisor at KASI Insight said that "After a tough year in 2016, Johannesburg has entered this year in a surprisingly bullish mood, with consumers most optimistic that economic conditions in the country and in the city will improve over the next six months. The South African economy is expected to recover from very low growth this year. "
This is good news for consumer facing companies heading into the New Year. But for this to happen, South Africa needs to improve productivity, tackle the big unemployment to provide opportunities for everyone. A low Rand should help boost the exports.
The overall index that captures consumer confidence in six major urban centers in Africa dropped 3 points from +12 to +9 mostly driven by a drop in consumer confidence in Ghana just a month after the election. It's back to reality after the post election euphoria.
About the KIC Score
The KASI Insight Consumer Confidence Score (KIC SCORE) is a composite index compiled from a seven-questions survey that runs monthly via our consumer polls in the countries covered. The data output is based on fresh, randomly selected representative sample of city dwellers aged 18-64.
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About KASI Insight
KASI Insight is Africa's most innovative research and advisory firm. We solve problems that present challenges for most firms doing business in Africa - lack of fresh local market data and the need for contextual insight and innovative research methods. We provide market research, actionable insights and data driven advice from over 10 countries in Africa.
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