Will Managing Finances Become A Struggle for South Africa During 2018
2017 was basically a whole year to brush off regarding the economic wellness of a lot of South Africans. Nevertheless, what is changing for people as 2018 moves forward into Spring?
Many will probably have produced a listing of financial resolutions in January. Much of the 2018 goals will have focused on financial challenges. The top 2017 country finance problems included a reduction in GDP growth rates, stagnating job opportunity development, ever-increasing numbers of un-employment and also tremendously excessive levels of income and wealth inequality.
Let’s look at the situation as it developed over the last 5 years.
Unemployment has grown steadily from 4.6 million in 2011 to 5.9 million in 2016 and unfortunately, although this increase has slowed, unemployment is expected to continue to grow to 7.2 million by the end of 2018. That means, if current economic and employment trends set to continue, there’ll be around 1.3 million more unemployed at the end of 2018 than there were in 2016.
Official figures show that joblessness has risen in seven of the nine provinces, with the highest rate of unemployment in Free State province and the lowest in Western Cape.
According to the data, Gross Domestic Product (GDP) growth rates have fallen from 3.3 percent in 2012 to just 0.3 percent in 2016. Although GDP growth is expected to be below 1 percent for 2017, the central bank forecasts it will rise to 1.5 percent in 2018. While this represents a slow recovery which is unlikely to prevent a further increase in unemployment, at least things are starting to move in the right direction.
Given the constant downgrading of economic growth expectations for 2017 and 2018, household finances will fail to recover and the financial wellness index, which takes into account seven aspects of an individual’s financial situation, is also like to stagnate.
Financial wellness measures everything from an individual’s household material deprivation and hardship to their financial confidence and ability to plan for the longer-term. From 2011 to 2016, financial wellness rates have increased marginally – from 64.1 in 2011 to 67.3 in 2016. The figures for 2017 are yet to be released but they are expected to remain stable.
Household indebtedness in South Africa is currently at crisis levels. At least three-quarters of South African households admit to being under significant financial pressure. For the majority of households, this is down to factors they have no control over such as stagnating economic growth, drought and the falling value of the rand.
However, there are also many households that are under financial pressure as a result of the bad management of their finances. That includes things like poor financial planning, the incorrect use of credit, high levels of indebtedness and low levels of financial literacy.
Are you struggling to take care of your finances and expecting far too similar a deal over the year forward? Maybe you’re starting to notice signs of improvement? Please discuss your experience with our audience in the responses below.