Economy of South Africa in 2021: did people overspend to 'compensate' for 2020?

Consumer spending is always a key metric when assessing a country’s economic health. In simple terms, it relates to how much people are spending and enables us to understand the financial state of a country. For South Africa, consumer spending levels were understandably down in 2020, due to Covid-19.

With job losses or reduced working hours meaning people had less money coming in, it naturally affected how much they then spent in normal life. Lockdowns also saw many businesses forced to close and this meant people were unable to spend money with them as usual, through much of 2020.

2021 shows increased consumer spending in South Africa compared to 2020

The good news for people in South Africa, though, is that consumer spending levels in 2021 showed a marked improvement. The third quarter in 2021, for example, showed a figure of ZAR2.9tn, while quarter three in 2020 was a figure of just ZAR1.86tn. For many, this shows that South Africans are tiring of an existence blighted by Covid-19 and are starting to spend money on having fun once more. It is therefore feasible to suggest that 2021’s levels of spending were something of a reaction to 2020 and that people are spending more now to compensate for what they missed out on in those 12 months.

With this rise in spending during 2021, there are reasons to hope that the economic picture in the country is improving. Could the long-term effects of Covid-19 be waning, and which sectors might be behind the increased spending?

Online spending leads the way

If there is one area within the South African economy that seems to be leading the way, it is online spending. Online casinos are a great illustration and the best online casinos in South Africa give people a way to have fun without leaving the house. This has naturally been key throughout the pandemic, when people might not have been confident enough to visit a casino in person or the land-based casinos they would normally go to were shut.

The same can also be said for online movie streaming services, which enabled people to watch films from home rather than heading out to the cinema. It is a similar picture when you look at other areas within South African life in recent times, like online shopping. Many people around the country will now spend money ordering food or clothes via the internet, for example. Industries like these show what drove the greater consumer spend in South Africa in 2021 and also highlight which sectors could be behind greater spending as time moves on.

Will better consumer spending stave off the long-term economic impact of Covid-19?

The big question for many in South Africa is whether increased spending by consumers will stave off the long-term consequences of Covid-19. It would seem that this should be the case.

People in the country spending more helps to keep businesses going and ensures they cannot only pay staff but also avoid redundancies. In addition, greater spending enables businesses in South Africa to expand and hire new staff, thus boosting the economy even more. Companies that supply businesses with stock will also benefit, as they will not only get orders and be paid on time but also potentially get larger orders to fulfil from businesses that are thriving.

Greater levels of consumer spending also help to create a feel-good factor in the country and give the nation overall a sense of confidence in how well it is performing. This not only encourages people to spend more but also makes South Africa a more attractive place for foreign investment.

Consumer spending key for South Africa

As the above shows, consumer spending is an important metric for South Africa’s economy in the last few years. It is also vital for looking at how it could stave off the impact of Covid-19 and help the country recover from the effects of the pandemic. With levels of spending being higher than expected in 2021, in compensation for 2020’s reduced figures, the signs appear to be positive.

Manager: Lawrence Muller lawrence.muller@onlinecasinosonline.co.za

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