Signs of improvement for SA economy

Economists are mildly optimistic about the prospects for slight growth in the South African economy in the second half of the year, but challenges remained. They also warned that with the Reserve Bank still facing the dilemma of striking a balance between weak growth and heightened inflationary pressures, it could raise interest rates by another 0.25 percentage points in November.

Households shown to be in a slightly stronger financial position

First National Bank’s latest household debt-service risk index shows that householders are in a slightly better position to service their debts.

But dark clouds continue to linger

Without households being willing to spend more, the economy will not grow fast enough to attract more investment or create jobs. Decisions by firms to spend on capacity or people are based on the state of demand for their goods and services, which is determined by households in terms of what they have to spend. If demand remains subdued, the economy will not achieve even a modest 4% GDP growth rate.