Black Friday shopping.
An economist has warned millions of indebted consumers not to overspend on Black Friday, amid threats of a further downgrading of the country’s sovereign debt by Standard & Poor’s Financial Services and the high likelihood of another downgrade by Moody’s early next year.
This could seriously hamper their ability to pay off debts.
Economist and chief executive of Debt Rescue, Neil Roets, said although some of the deals offered by retailers on Black Friday were discounted, many deals were nothing but bait-and-switches and consumers should take precautions.
“They discount a handful of items to create the impression that everything is being sold at bargain-basement prices, when the facts show differently,” Roets said. “The harsh reality is that South African consumers are now in the worst situation since the first democratic election in 1994.
“The unemployment rate is at its highest level, government debt is at the point where it is about to balloon into a catastrophic situation that may not recover for decades and consumer debt is at an all-time high,” Roets said.
He said over the past several years, Black Friday and Christmas shopping sprees had left many consumers in a financial mess due to retailers’ tricks to try and save themselves from the oppressing economic times.
He believed things were going to get a lot tougher before they get better and this was not the time to act recklessly, but only to buy things that were absolutely necessary.
“While we all feel that we desperately need a holiday at the end of a brutal year, keep those holidays within budget and don’t think that if you don’t have the money for school fees in December, the money will somehow magically become available in January,” said Roets.
Although many consumers had already reached the point where there was nothing left to cut, he said many would have to adapt to the lifestyle of tighter market conditions, doing more with less and with little to no chance the current sluggish economic growth would improve.
With gross consumer debt at around R1.9 trillion and the government’s gross loan debt at R2.2 trillion in the 2016/17 financial year, it was clear that South Africans were in for a very rough ride.
According to the National Credit Regulator, almost half of all consumers were three months or more behind in their repayments. The major culprits were credit and store cards, followed closely by unsecured debt.
A report by the Central Energy Fund revealed the rand depreciated against the US dollar during the September-October compared with the previous period.
The average rand/US dollar exchange rate for the period September 27, 2019 to October 31, 2019 was 14.9293 compared with 14.8432 last year.
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