It is on everybody’s lips in South Africa and in fact all over the world. Recession. South Africa adds another word, junk status. Despite not completely understanding the concepts, the fear attached to them is taken seriously. This is not to mention floods, riots and of course COVID-19
This fear extends to any and every conversation which generally leads to a degrading of the country. Having said that, and in avoidance of such conversations, does it actually impact the ‘normal people’ such as ourselves.
The answer, I believe is no. There are several reasons why I say this.
Recession / Junk Status.
Unless you are dealing with international clients or exporting or importing foreign goods, the exchange rate and status does not have a big impact on you. It may alter some food prices but that would be minimal in the grand scheme of things.
Having said that, it may well impact on the tourism of South Africa and in particular you town or city. This could have knock on effects on businesses locally.
Look around at what people are spending money on. 2 points appear here:
- Eating out. There is a restaurant in our suburb and apparently it is a great place to go. As I drive past it at all hours of trading, I see that it is busy from 11:30am, some days well into the night. I have observed this activity over a period of time. It is busier at month end as you would expect. Eating out and especially drinking (both alcoholic and non alcoholic) is not cheap. Recession?
- Cars. Need I say more? Next time you are driving to work or dropping your kids off at school, take a look at the vehicles that are around you. They generally not old cars and they are therefore not cheap. The monthly instalments on these cars are large and most will have balloon or residual payments of up to 45%! Take an average car of R 250 000 and do the math. It is great to have a comfortable car, I agree but at what price?
There are other areas that I am not going to go into because the list is extensive. Examples are houses, clothing and holidays. There may well be a recession in the technical definition but are you being impacted upon? The immediate answer is always YES but it is normally not with any substance to prove it. Before you go along with the masses, look around and ask whether it is really changing your own lifestyle.
This post was updated in May 2022