Momentum/Unisa South African Household Index Q4 2018 – R449.8 billion of household’s net wealth wiped out

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The Momentum/Unisa South African Household Index of Q4 2018, found that 6.3% of households’ real net wealth was wiped out over the course of just one year. This is the largest reduction households suffered since the Great Recession when 15.6% of their real net wealth disappeared between Q1 2008 and Q1 2009.

Fin24 reports that the Household Index describes the decline in household wealth as “concerning” because it contributes to slower economic growth and job creation, as well as an increasing number of households in the low-middle to high-income groups having insufficient money to cope with emergencies and retire at an acceptable standard of living.

But what contributed to the loss in the real net wealth of SA households in 2018? Various domestic events including:

  • The reduction in share prices of companies in which households’ retirement funds are invested;
  • The weak economic growth of just 0.8%;
  • Increasing consumer price inflation;
  • Renewed load shedding in the fourth quarter of 2018;
  • Investor fears created by proposed land expropriation without compensation;
  • An impression that the SA Reserve Bank’s independence is in danger;
  • The negative impact of growing public debt.

Click here to read the Fin24 article.

Momentum also published its Economic and Market snapshot in April 2019. Some of these highlights include:

  • United States (US): Higher inventories and lower imports contributed to a higher-than-expected growth print for the first quarter of 2019, but resumption in imports and weak investment should lead growth lower from here.
  • Euro area: A further slump in consumer and business sentiment is reflective of ongoing economic troubles.
  • United Kingdom (UK): Political uncertainty continues to disrupt business plans, but firms have indicated they are implementing contingency plans in case of a ‘no-deal’ Brexit.
  • China: There are tentative signs of an improvement in economic conditions, but a major rebound is not expected due to the nature of the targeted stimulus-response implemented by Chinese authorities.
  • South Africa (SA): Households are feeling the pain of previous tax and tariff increases. Although credit growth is improving off its lows, consumer spend is likely to remain soft in the near term.

Click here to download the Economic and Market snapshot in April 2019.