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South African Consumer Confidence Falls Sharply

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Consumer confidence in South Africa worsened sharply in the third quarter, but stayed far above levels recorded in the final years of the nation’s former presidential regime, a survey showed on Wednesday.

The consumer confidence index, sponsored by First National Bank (FNB) and compiled by the Bureau for Economic Research, fell to +7 from +22 in the previous quarter.

“A confluence of adverse economic developments in all likelihood deflated the confidence levels of consumers in recent months,” FNB Chief Economist Mamello Matikinca said.

“A technical recession in the first half of the year, rising unemployment, an increase in VAT and personal income taxes” contributed to worsening confidence, she said.

Matikinca also cited a substantial drop in share prices on the Johannesburg stock exchange, a depreciation in the rand currency and soaring fuel prices.

Still, consumer confidence was better off than levels seen during former President Jacob Zuma’s last three years, when the index ranged between readings of -3 and -15, the report said.

South Africa, the continent’s most industrialised economy, is in a recession, upping pressure on the central bank to cut rates to support growth.

It has put pressure on President Cyril Ramaphosa as he tries to jump-start economic growth by attracting investment.

The economy is also struggling with ballooning debt that risks pushing its sovereign credit ratings deeper into territory.

Consumer confidence fell across all income groups, with low-income consumers hit the hardest, the survey showed.

On Tuesday, a separate survey showed that South African business confidence fell for the third straight quarter. (Reuters)

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