Consumer confidence increased slightly – Mastercard Index
29 October 2014
by Buhle Ndweni
South Africa’s consumer confidence has shown only a minimal increase due to the struggling economy
According to the latest MasterCard Consumer Confidence Index released today, South Africa’s consumer confidence showed a slight increase.
The index measures consumer opinion and expectations of South Africans using five economic indicators – the economy, employment, the stock market, regular income and quality of life.
The country’s confidence went up by 2,4 points to 58,7 from 56,3 in 2013.
The survey reveals that Cape Town is the most optimistic city in the country, with confidence rising by 34,2 points from last year to a score of 63,7. Durban’s confidence declined by 3,1 to 52,5, and the country’s commercial hub, Johannesburg, took a 12,5-point hit, falling to 57,4.
One of the contributing factors to the increased optimism of Capetonians is the improved public sector governance in the province. Johannesburg on the other hand experienced a dip because of protracted strike action in a number of sectors, which had a knock-on effect on the city, which is the commercial heart of South Africa.
"Our confidence is not as optimistic as Nigeria, but we’re not bad"
Speaking to DESTINY, economist and CEO of Frontier Advisory Dr Martin Davies says the performance of the index is dependent on the culture of the country.
“Looking at other countries for example, Kenya had a hit in consumer confidence. We saw that happen with the Westgate attack last year, the ongoing corruption, and the attack that happened in Nairobi in September,” he says. “But Nigeria is super-optimistic all the time. Their growth is 7%, they have strong headlines in GDP and people’s income has doubled in 10 years.”
So where does South Africa lie? Apparently somewhere in between. “Our confidence is not as optimistic as Nigeria, but we’re not bad,” he says.
Although the country’s consumer confidence took a knock in August 2012 with Marikana massacre, Dr Davies says the index was still positive. “South African consumers are more optimistic than we think.”
He says South African consumers are positive, especially about regular income and quality of life. Regular income increased by 8,1 points to 77, a very optimistic score. “People are confident about having a continuous flow of income into their bank accounts every month,” he says.
But on the flip side, the weakening economy and changes in the labour market have had a negative impact on consumer confidence. “There’s a lot of pain out there, but consumers remain upbeat despite the state of the economy.”
That the quality of life has increased by 3,4 points to 53,9, reflects that the surveyed respondents have a good work-home balance
Dr Davies says consumer confidence can be increased by growing the economy and creating more jobs, which would encourage greater consumer spending.
Destiny Man