Consumer debt up sharply in SA.In an August 14, 2007 review of consumer indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. in South Africa South Africa, Afrikaans Suid-Afrika, officially Republic of South Africa, republic (2005 est. pop. 44,344,000), 471,442 sq mi (1,221,037 sq km), S Africa. , the market research firm Euromonitor (London London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. ) said that the South African Reserve Bank The South African Reserve Bank is the central bank of South Africa. It was established in 1921 after Parliament passed an act, the "Currency and Bank Act of 10 August 1920," as a direct result of the abnormal monetary and financial conditions which World War I had brought. (SARB SARB South African Reserve Bank SARB School Attendance Review Board SARB Surface and Atmosphere Radiation Budget SARB Sprint Amateur Radio Club SARB Status, All Resource Busy (NEC) SARB System, All Resources Busy ) was increasingly concerned about increases in consumer debt. The review was posted on Euromonitor's website. The review began with, "Consumer debt is growing at an alarming pace in South Africa, driving inflation upwards. Attempts by the South African Reserve Bank to bring consumer debt under control will dampen consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. , but are necessary to keep economic stability." Euromonitor said that in the first quarter of 2007 consumer debt was 76.0 percent of disposable income disposable income Portion of an individual's income over which the recipient has complete discretion. To assess disposable income, it is necessary to determine total income, including not only wages and salaries, interest and dividend payments, and business profits, but also compared with 47.6 percent in 2003. Consumer debt has an obvious, negative effect on inflation. The rate of inflation was 6.4 percent in June 2007 compared with 4.6 percent in June 2006. This rapid rise in the rate of inflation is the central reason for the SARB's concern. The SARB raised the basic South African interest rate by 2.5 percentage points in one year. The rate was increased from 7.0 percent in June 2006 to 9.5 percent in 2007. "Another measure designed to make borrowing more difficult," said Euromonitor, "was the June 2007 introduction of regulations requiring credit providers to assess applicants' income, monthly financial commitments and prospects." As a result of these moves consumer spending is likely to slow. Other evidence of increasing consumer debt includes a sharp rise in private final consumption, an increase of 33.2 percent between 2001 and 2006. Retail sales are also increasing and an increasing rate. In 2004, total retail sales rose by 8.0 percent. In 2005, retail sales increased 10.8 percent. And in 2006 retail sales climbed 10.4 percent. Most borrowing was in housing with mortgages 59 percent of consumer debt. Euromonitor said, "The growth of private consumption reflects the emergence of a black urban middle class." In 2006, black consumers in the middle and upper income segments were approximately 12.0 percent of the employed workforce. In 2001, black consumers in the same income segments were only 2.0 percent of the employed workforce. MARKET FOCUS: |
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