Spenders are ‘running out of steam’ and it might shelve growth
The impact of reduced spending in retail could have less-than-desirable consequences for the economy
All over the world, consumer spending drives the economies of many countries, both developed and developing. In SA, it accounts for around 60% of GDP; in the UK, the figure is about 64%; and in the US it is closer to 70%. And as long as this consumer spend remains healthy, so should economic growth.
But there are signs that consumers are “running out of steam” in several jurisdictions, including SA, and that doesn’t augur well for neither the economy nor retail stocks.
Recently the SA Reserve Bank reduced the repo rate by 25 basis points, and theoretically this should have a positive impact on retail spending. But most economists are taking the view that it is a case of too little, with no lasting effect on the current moribund SA economy...