Debt management company Debt Rescue has warned that consumers are in for a very rough ride.
Statistics South Africa announced today that the country is in recession, after the economy shrank by 0.7% in the first quarter.
“It is highly likely that ratings agency Moody’s would downgrade South Africa to junk status after Statistics South Africa released the latest GDP figures showing that the economy had shown negative growth for two quarters, placing it officially in recession,” the company says.
CEO Neil Roets says adding to the sluggish economy is sky-high unemployment. He says figure for so-called broad definition unemployment had risen from 35.6% in the last quarter of 2016 to 36.4% in the first quarter of this year.
“Being officially in a recession is a big deal and unless we can somehow blow some life into our very stagnant economy, consumers are in for a very rough ride,” he says.
Roets says well over a third of the economically active population who want to work cannot find a job.
“One consequence will be that they cannot pay their bills which may very well drive them into the arms of money lenders who charge extortionately high interest rates,” he says.