Consumer pulse: Consumers navigate multiple headwinds
15 Dec, 2022

Momentum Investments have released their report based on ‘Consumer pulse: Consumers navigate multiple headwinds’ prepared by the Momentum Macro Research Team.

Below is a summary of highlights from the team, as well as a downloadable PDF of the research paper.

Commentary and highlights by Sanisha Packirisamy, Economist at Momentum Investments , Tshiamo Masike, Economic Analyst at Momentum Investments and Herman van Papendorp, Head of Investment Research & Asset Allocation at Momentum Investments.


The First National Bank/Bureau for Economic Research (FNB/BER) Consumer Confidence Index (CCI) surprised to the upside with an improvement of 12 points to -8 in the fourth quarter of 2022. The improvement was broad-based, but the optimism that consumers displayed about their expected financial position contributed the most.
There are signs of rising consumer stress with households taking up more credit to deal with the increase in the cost of living. This is contrary to the improvement in the sub-index measuring consumers’ financial position, which signals that those who are hopeful about their financial position may not be indebted.
A higher percentage of rejected credit applications and a lower share of impaired records are the result of tighter lending standards by credit lenders.
Credit statistics suggest that a smaller number of consumers are being granted unsecured debt, but the loans are larger in size and are mainly targeted at the middle- to upper-income earners.
BankservAfrica reported to have broken a record by processing over 100 million EFT (electronic fund transfer) credit payments in October 2022. This indicates that consumers are increasingly using credit to make ends meet.
The ratio of household debt to disposable income as well as that of debt-service costs to disposable income increased marginally in the second quarter but remained below long-term averages despite a higher uptake of credit and higher interest rates.
Despite multiple headwinds, consumers are not overly pessimistic about their financial position as one would have expected in an environment where wages have struggled to match the recent surge in inflation.
Relative optimism among low-income earners likely stems from more government support, while that of middle- to high-income earners is likely a consequence of higher investment returns, a savings buffer and higher income growth.
Following the re-opening of the economy, consumers’ spending priorities have shifted from home renovations and expenditure on medication to expenditure on food and drinks as well as clothing and footwear.
The retail sector is showing signs of ongoing strength following positive growth in sales volumes in the third quarter. Moreover, successful Black Friday sales are expected to boost growth in the fourth quarter. Nevertheless, inconsistent and insufficient electricity supply remains a drag on growth in the retail sector and is expected to keep a lid on the country’s potential growth rate. The success of Black Friday is expected to support the retail sector in the fourth quarter given higher foot count in malls relative to last year as well as the indication of higher transactions, of over R3 billion, by FNB customers.
Still weak consumer confidence suggests that despondent consumers are likely to contribute less to overall growth going forward. We expect growth in household consumption to dip from an expected 3% in 2022 to 1.4% in 2023.

Download the full report – click below…



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