Bank foresees a tough year ahead for consumers

MBOMBELA – The Nedbank Private Wealth division met with clients and business people on Thursday to discuss the current economic climate and outlook for the financial year.

Heading the talks was Nedbank senior economist, Ms Nicky Weimer. On discussion was the challenges that the domestic economy is facing. Also on the agenda were the structural constraints that hamper economic growth.

“The issues relate to a lack of economic infrastructure such as railways and public transport, power failures and the increase in basic services such as fuel and transport prices,” Weimer said.

Foreign investors had also been scared away by the current political leadership in the country. “Investors get very worried when they notice a trend that political leaders do not act in the interest of the country but that of a few individuals,” she said.

Also, the chopping and changing of finance ministers had caused uncertainties among investors, who have since lost trust in the country.

She stated that although food prices were stagnant at the moment, South Africans are likely to experience a 10 per cent, or more, hike in the coming months.

“The drought that we are currently facing has effected food production and consumers will suffer the consequences of this natural phenomenon.” She also mentioned that the rand was vulnerable and would remain so for some time.

“People are very concerned about where they put their money, and if they realise their assets can not be guaranteed, they move to where there is security,” Weimer said.

What’s more, the country had been borrowing money at an alarming rate and this resulted in a steep rise in government debt.

According to Weimer, there has also been a drop in the GDP in this year. “China’s slow economic growth has also impacted on the domestic economy negatively as they import less from our country and we are dependent on their growth,” she said.