Business In Motion

Following a year of slowing economic growth and an imminent global recession, South Africans remain optimistic about the immediate future of their national economy, according to the latest MasterCard Worldwide Index of Consumer Confidence.

The Index is based on a survey that measures consumer confidence on prevailing expectations in the market for the next six months, looking at five key economic indicators: Employment, Economy, Regular Income, Stock Market, and Quality of Life.  The survey focuses on the Middle East and Africa region.

With 100 being the highest possible level of consumer confidence, South Africa scored a very positive 78.7. The score represents an increase in confidence from six months ago but remains five points below South Africa's score for the first half of 2008.

Just shy of South Africa's historical average of 79.4, the latest score is the second highest in the Middle East and Africa (MEA) region, with only consumer in Kuwait being more optimistic about their market's economy. 

"One gets the sense that South African consumers feel relatively optimistic about the next six months," said Jeni Webber, country manager for MasterCard Worldwide. "Government leaders, bankers, and analysts have, in general, been saying that the South African economy will not see a major downturn, as will likely be the case in other markets. South Africans appear to share this optimism."

Overall the indicator that South Africans feel most optimistic about is Regular Income. When asked whether they expected their regular income to either increase, remain the same, or decrease over the next six months, 66.2% of respondents said that they expected it to increase, whereas just 7.2% of them said that they expected it to decrease. This resulted in a score of 90.2.

Chief Economist at T-Sec Mike Schussler says that optimism in this indicator is largely influenced by the level of social grants payments in South Africa.  "…social welfare payments, as well as other forms of income, are seen by South Africans as a major stability factor in their lives."

Currently about 26 percent of South Africa's population receive some form of social welfare.

Despite the overall positive sentiments among South African consumers, Schussler also warned against naivety, reminding the country that we are in the midst of the worst economic downtown since the 1976.

"We are in an economic downturn and the worst may yet come. But this is a cycle, not the end of the world. Countries like South Africa stand to do very well when the commodities market recovers."

SOURCE: SA GOODNEWS