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Mcebo Dlamini appears in court. Picture Credit: Julia Madibogo
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Economic crunch 'affects everyone'

By Kea' Modimoeng and agencies | Jul 24, 2009 | COMMENTS [ 0 ]

THE financial situation of many South Africans is worsening as the economic recession continues.

This is according to an index launched and released yesterday in a joint effort between the Bureau of Market Research (University of SA) and the FinMark Trust.

The first South African Consumer Financial Vulnerability Index revealed that South Africans have a high level of income vulnerability and a low level of savings.

According to the index, expenditure vulnerability is being prompted by the high levels of consumer price inflation in SA, especially food price inflation.

Finance Minister Pravin Gordhan was at the launch in Johannesburg and said the low level of savings in South Africa was a concern and means the country has to rely on foreign investment.

Liberty Life consumer economist Tendani Mantshimuli said she agrees household saving remains low.

"There are contributors such as high debt levels, high unemployment and retrenchment rates and low saving levels," she said.

Mantshimuli said lowering interest rates would not necessarily assist as "low interest rates make pensioners more vulnerable".

According to the index, more than 400000 South Africans had lost jobs since the beginning of the economic recession, and about 42.4percent of them cannot keep up with payments on their accounts even though they might have an income.

The nationwide survey of South African consumers revealed that respondents believed they were financially worse off than a year ago, with nearly 35percent of respondents saying their ability to make ends meet deteriorated during the past year.

Cedric Gina, president of the National Union of Metalworkers of SA (Numsa), the union which has been fighting for the reduction of interest rates, said the study shows that everyone is affected.

"It is not about the working class alone, but even the managers are affected," said Gina.

He said Numsa was hopeful that the newly-appointed Reserve Bank governor Gill Marcus would give labour a fair hearing, unlike her predecessor Tito Mboweni.


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