As frightening as what it is, we need to come to realise that South Africa is once again heading into a recession. Our economy is steadily weakening and many sectors are taking strain causing high unemployment rates, political uncertainty and credit downgrades
But what does this news mean to us in South Africa, and how will this impact us on a day-to-day basis?
Firstly, how do we define a recession?
A recession is a prolonged period of time where a nation’s economy slows down. This slow-down is characterised by a number of different trends which include: a decrease in household consumption, a decrease in factory production, growing unemployment, a slump in personal income and an unstable stock market.
What does this actually mean for us?
When a nation’s economy enters a recession, a number of factors occur. Due to the economy being up and down, foreign and even local businesses are hesitant to invest, unemployment increases as the demand for products and services decreases and those without jobs spend less. People who remain employed are also hesitant to spend as they remain cautious about job security. Due to this decrease in spend the economy shrinks with it. A recession is not good news for South Africa and with the recent downgrades and political instability, South African consumers are understandably feeling anxious and you should prepare yourselves for a bumpy road ahead.
So now what?
As South Africans we have to accept the fact that times are hard and they are most likely going to get harder. Racking up more debt is not the answer because sooner or later it will catch up with you. It is better to tighten your belts now and adjust your lifestyle to suit your income however unpleasant that may be.
Consider a long-term solution to your financial distress such as debt counselling which will save you money and put you on the direct path to becoming debt free.
DON’T FORGET! If you need guidance regarding debt counselling, contact us and we’ll get you started!