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South Africans may be saving too much to spur growth – Absa

Savings rate rises from 16.6% in Q1 to 18% in Q2.
The pandemic seems to have made consumers more keen to save for a rainy day. Image: Shutterstock

South Africans’ failure to break the restraint they exercised during the most financially challenging months of the Covid-19 pandemic could temper the nation’s economic growth prospects, according to Absa acting CEO Jason Quinn.

Banks in Africa’s most industrialised economy last year rolled out loan-payment breaks to consumers and companies to ease the pressure of restrictions aimed at curbing the coronavirus that saw the economy contract the most in at least 27 years.

Absa, South Africa’s third-largest lender, and its peers found the relief led to increased deposits as customers opted to save.

The trend has continued into this year. The national savings rate increased from 16.6% in the first quarter to 18% in the three months to end-June, according to the South African Reserve Bank’s Quarterly Bulletin published on Tuesday.

“Much of that cash is still on deposit with us and shows you that South Africans have genuinely been quite defensive through this process and maybe some are still too defensive,” Quinn said in a webinar.

“How do we get growth when people are still cautious and defensive?”

South Africa’s economy is forecast to grow 5.3% this year, 1.7% in 2022 and 1.8% the year after, according to central bank data.

Despite the projected rebound, output is only expected to return to pre-pandemic levels by 2023, according to National Treasury.

With assistance from Prinesha Naidoo.

© 2021 Bloomberg L.P.

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They tell us to save for a rainy day and for retirement and now they tell us we save too much?

Countries that have a strong savings habit, are generally growth-positive.

What is this nonsense from a leading banking group?!

(…we read such bizarre comments as proof that the ongoing skills exodus also impacted the financial sector…).

That…is no leading banking group. It is clearly number 4 of the Big 4 -and has a market cap less than new Capitec. Its chairperson defines the term mediocrity-a term that would be unduly complimentary towards its management team

Yes.

People have to save as corrupt municipalities and the anc government in general is out to fleece the normal citizen and if they can will have you live in the street while they steal the rates and taxes you pay.

They believe its clever but it is destroying to country as this is money that should have been spent elsewhere in the economy to create jobs etc. Now its just being stolen at a rapid rate.

The savings will serve no purpose other than buy you a bit longer before you are out in the streets.

If people don’t get rid of this anc scourge time is up.

I am now going to stop listening to Bloomberg and Absa! First they say we have the lowest savings rates in the world and it is ‘bad’, now we save too much!

WTF!

In a country with a historically poor savings rate, this comment from a top 5 banking institution is totally irresponsible- verge lunatic or even treasonous.

Investment ratios are directly proportional to savings rates, so in the long run this trend will be great for appropriate and sustainable green infrastructure and development.

Also, a green economy is not grown on debt traps- it is grown organically.

I see this trend as very encouraging that Sa’ers are starting to pull the wool from their eyes and free themselves from the chains that are banker terms, conditions, sureties and loans.

This without detailing the minimum 10 X advantage banks are given to turn thin air into debt via the bankers acceptance rate and very hyper-favourable reserve ratios. All before they scrape the sleep from their eyes and head for breakfast.

Modern day slavery is cemented in the cesspit of indebtedness. One of the pillars of corrupted and failing democracies around the World.

Viva the green economy. Vive Afrique Du Sud!
!

End of comments.

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