The bleak economic outlook is a result of the country being downgraded by rating agencies S&P Global and Fitch. Moody’s has the country two notches above junk status but put the country’s sovereign rating on downgrade review last week.
Economist Mike Schussler said South Africans, particularly men, are likely to cut back on shopping for clothes. But, in keeping with a global trend when it comes to a recession, he expects lipstick sales to rise “as women still want to look and feel good”.
“I think the extras that people buy in shops get cut. Insurance is cut. Furniture sales decline, as do car and house sales.”
Schussler said DStv packages were likely to be downgraded.
“Strangely, we have seen sales of fast-food increase but that could be because people have shifted from sit-down restaurants.
“Hotels and guest houses are getting fewer South Africans as people shift to cheaper options such as Airbnb or LekkeSlaap, or stay with family members.”
Schussler expects a decline in air travel and for company expense accounts to be slashed.
“Hardware picks up as people fix things themselves. Hi-tech gets a cut. Data is cut back as people find Wi-Fi spots or do more on the fixed-line internet at work or home.”
Economist Dawie Roodt said the downgrades are very bad news but it’s not all doom and gloom.
“The downgrade is simply telling us what is going on. It’s like a scale. The scale doesn’t make you fat. It is simply telling you what is happening. We have been paying a very dear price for a long time for the quality of our political leadership.
“The rand did weaken but not dramatically. Things are going to get worse but we must be careful that we don’t talk ourselves into some sort of hole. There will be less spending and borrowing. People will be scared.”
Roodt predicts that less money will be splashed on cars, homes and big-ticket items such as televisions.
“People will probably buy beer and drink at home. There will be a change in consumer spending patterns. One can expect people to stop spending money on luxury goods,” said Roodt.
Ordinary South Africans said they would hone their budgets by slashing DStv, insurances and investments. Johannesburg businesswoman Yudhika Sujanani said she would cut back on “basically everything. It’s just hard times and we need to be prudent. Pay off debt as quickly as possible.”