The 28-year low level of savings in SA has created a vicious circle of low economic growth, which in turn generates meagre incomes that cannot boost future savings, writes Londiwe Buthelezi
This trough has created a vicious circle of poor economic growth, which in turn generates meagre incomesSouth Africans are saving less, even dipping into their savings and investments to survive as the sluggish economy, high unemployment and rising cost of living make it harder for people to put away money.
The first report on this index was published in 2016, but it tracks the country’s saving rate from 1990. The latest iteration shows that the index hit a low of 60 at the end of 2018 and deteriorated further to 56.6 index points in the first quarter of 2019. Meanwhile a savings rate that can enable SA to invest to the level required to boost economic growth to optimal levels would push the score to 100 index points.
The full report on the index which breaks down levels of saving between the public and private sectors, business and households is yet to be released. But, even if it shows that one sector saved while the other was consuming, it does not change the fact that at the aggregate level, there is less money available for investment to grow the economy at a rate that can start creating more jobs, said Saville.
To achieve that requires material change in consumption patterns but Saville says even if the shift happens, something else is needed to channel those savings to investment; investment confidence. “Otherwise you’ll have this pool of savings that is lying, waiting for an opportunity. If you look at the investment behaviour on the JSE over the past two to three years, the appetite has been overwhelmingly to look for opportunities outside of the country rather than in the country.
South Africa Latest News, South Africa Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Everything you need to know about SA’s electionsA round-up of election news, views and analysis from politicians, voters and commentators
Read more »
LIVE | Disgruntled parties threaten court actionStay in the know: All the news, opinion and analysis around the 2019 general elections
Read more »
Everything you need to know about SA’s electionsSAElections2019 Some of the new parties will go home without securing a single seat in parliament. Get everything election related here:
Read more »