JOHANNESBURG (Reuters) – South African consumer confidence slipped to its lowest level in six years, a MasterCard Worldwide Index of Consumer Confidence showed on Thursday.
The twice-yearly survey that is done in 24 countries showed local consumer confidence fell to 59.8 from 67.3 six months ago and 78.8 a year ago. The latest score was the lowest recorded since the survey began in 2004.
“Consumers and businesses seem to have been hit harder by the global economic turmoil than it was first anticipated,” said Anthony West, general manager for MasterCard Africa.
The global economy slipped into a slump, dragging the South African economy to its first recession since 1992.
The local economy exited the recession in the third quarter but consumer demand remains depressed due to high debt levels and about a million job losses last year.
“Although the country managed to return positive real GDP growth in the third quarter of 2009, it will take at least another quarter for some sectors of economic activity to fully recover,” said Roelof Botha, an independent economist from Gopa S.A.
“From an economic policy perspective, the survey results suggest it would be wise to exercise caution with so-called exit strategies,” he said.
The South African Reserve Bank cut interest rates by 500 basis points between December 2008 and August last year and did not rule out further cuts, after leaving the repo rate flat at 7.0 percent for the fourth time early this week.
The Mastercard Index measures consumer confidence on prevailing market expectations for the next six months.