Consumer spending in 2022: what could be the main takeaways for South Africa?
As the new year gets into full swing, people around the world eagerly anticipate what lies ahead. This is both on a personal level in terms of their own careers and lives but also in a much broader sense. Recent events have left people around the planet much more concerned about the future and with a greater desire to plan ahead for it. This is certainly true in a country like South Africa, where the last few years have been turbulent for the nation’s economy.
One key metric of economic prosperity is looking at consumer spending. This is simply the amount of money people are spending and what they might be spending it on. By looking at this on both a global and domestic scale, it is possible to get a feel for what might lie in wait and which sectors might be on the up.
But how does this look currently for South Africa and what might it mean for how we spend money in 2022
Will we see spending continue to move online in 2022?
Before we look at what the current consumer spending figures show on a global and domestic scale for South Africa, it is worth answering the obvious question about how people might spend their money moving forward. Will the shift towards online spending in general continue?
During periods of Covid-19 lockdown in the last few years, people in South Africa have become used to doing things online that they might have done in person before. South African online casino sites are a great illustration of this and show how something which people in the country might have enjoyed in person before is now not only available online but is also the preferred choice for many. This can also be said for activities such as online shopping and catching up with friends via social media sites like Facebook.
But might consumer spending continue its move to a more online existence? The answer to this will be determined by how people in South Africa respond to outbreaks of new Covid-19 variants in future. At present, the Omicron variant is active, and it is easy to see how this could prompt more online spending, as happened when lockdowns were in place over the last couple of years.
If people do not feel confident enough to do things in person when outbreaks such as this are an issue, then online spending could become an even bigger part of the whole consumer spending picture. This could also happen if, moving ahead, more restrictions that stop them from completing activities in person are placed on people in the country. Of course, people in South Africa might simply continue to spend more online when Covid-19 is a mere memory, if they find it more convenient.
Global consumer spending report makes interesting reading
Although what happens at a local level is key for South Africans, having a good idea of the big picture is also wise. This helps to compare consumer spending in the country to other places globally and pick up on any overall trends that could be useful to know about.
The major takeaway is that consumer spending appears down as we move into 2022. This is due to the ongoing Covid-19 pandemic and more specifically the Omicron variant noted above. The emergence of Omicron at the tail-end of 2021 has put a noticeable damper on how much people are spending. This has seen industries like air travel, travel, hospitality and entertainment come under pressure from reduced consumer spending once more – but many hope this will not last.
Top financial experts, such as Peter McCrory at J.P. Morgan, expect the negative impact on consumer spending globally to be more short-lived than previously seen. Much of the impact is predicted to be focused in December 2021 and January 2022. As data seems to suggest Omicron is less virulent than previous Covid-19 variants, it is hoped that measures to limit people’s behaviour (such as lockdowns) will not be needed. This will leave people free to go about their lives as normal and spend money as they usually would.
What is consumer spending looking like in South Africa?
From a global perspective on consumer spending currently, we now switch to a more local view for South Africa. To begin with, it is key to note that this figure dropped from ZAR2,97tn in the second quarter of 2021 to ZAR2,9tn in the third quarter of 2021. It is expected that this figure may well drop again when figures for the last quarter of 2021 are released by the South African Reserve Bank. As this is in line with the global consumer spending drop at the end of 2021/start of 2022, though, it is not a cause for alarm on its own.
Another reason for hope in South Africa is that data from the country suggests a peak in Omicron cases could be seen in mid to late January 2022. If this turns out to be true, then the current Covid-19 outbreak could be over soon. This will naturally boost consumer spending in the country because people will feel confident enough to start spending money both offline and online again.
In addition, a drop in Covid-19 cases further into 2022 should see the impact on people’s jobs reduced. This will mean they have spare money to spend, both online and offline. With Omicron not leading to a huge spike in deaths in the country, the general global trend is that people look likely to cease trying to avoid the virus and start spending money on enjoying themselves again.
Consumer spending in South Africa looking to bounce back
As the above shows, consumer spending both in South Africa and around much of the world is seeing an Omicron-inspired lull currently. It is hoped that this will be short-lived, though, and that people will soon begin to start spending more on things like travel and entertainment again. For South Africa, people heading online to complete activities and a greater push to boost the jobs market could well be the key to consumer spending moving upwards. While online spending will help put money into key sectors locally, a boost to South African jobs from the wave of new start-ups in the country will, in the first place, give people money to spend.
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