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The SA Daily 07 July 2020

Confidence and HCE down

  • We expect total real household consumption expenditure (HCE), which accounts for over 60% of SA GDP, to contract by 10.5% y/y this year, four times the 2.6% contraction of 2009 in the aftermath of the global financial crisis (GFC).
  • Per Stats SA surveys, the pandemic and resultant lockdown have seen households lose their income as companies either reduced working hours or retrenched staff.
  • The informally employed too have lost their income; per the International Labour Organisation, circa 80% of a global 2 billion informally employed have been significantly affected. 
  • Confidence, both business and consumer, is at historical lows. The BER consumer confidence in 2Q20 would no doubt have fallen sharply due to the lockdown’s impact on consumers’ outlook for their personal finances and the SA economy.
  • Although the impact may not be equal across the consumer spectrum, even those with healthy balance sheets and employed in resilient industries have likely turned bearish now and would be likely to delay long-term debt obligations and purchase of big-ticket items.

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