Getting to grips with the technical recession

Getting to grips with the technical recession can be tough – the impact can be felt whether you are buying property for sale in Durban, or simply by walking around the grocery store, but the average South African is not a financial expert.

Understanding what the technical recession is will help you better come to terms with what to expect, and that allows you to properly prepare yourself to see out the storm. Essentially, a technical recession is declared after the country sees the economy suffer negative growth over two consecutive quarters.

In September, Statistics SA revealed that this had indeed happened in 2018, with both the first and second quarters of the year reflecting negative growth, which means that the economy was shrinking instead of growing. This goes against the prediction made by the Treasury, where an expected growth of 1.5% for the year was announced.

The problem is, the technical recession is not the only financial concern for consumers. Prior to the announcement, there had already been steady increases on the fuel price as well as the VAT increase from earlier this year, which had a major impact on household finances.

The rand has also been weakening, and this does not only affect the cost of travelling abroad, but also has a major impact on import costs as well as making it more difficult for people to get finance for the likes of home loans. First-time buyers will feel the impact the most, as affordability becomes a real issue.

Considering everything mentioned above, the best advice from experts is to ensure that you closely monitor your personal finances. Be smart about what debt you choose to take on, as further economic issues could quickly see you sink into overwhelming debt if you don’t keep track of your budget.