Survey indicates two-pot retirement system giving consumers reason to spend big again
Consumer confidence has jumped to a five-year high following the latest release of a survey by FNB and the Bureau for Economic Research.
Picture: PhotoAlto via AFP
JOHANNESBURG - The implementation of the two-pot retirement system has given consumers reason to spend big again, as households show early signs of a willingness to open their purses.
Consumer confidence has jumped to a five-year high following the latest release of a survey by FNB and the Bureau for Economic Research.
ALSO READ:
- SARS says it's processing R4 billion in two-pot retirement system payouts
- Alexforbes processed more than R1bn in withdrawals since two-pot retirement system kicked in
- Two-pot system: Scores of consumers complain about not being able to tap into savings
The consumer confidence index (CCI) improved from negative 10 to negative five during the third quarter of the year, recording its second consecutive 5-point increase.
Although the latest reading remains below the long-term average of the (CCI), the reading of negative five is the highest confidence has been since the first half of 2019.
Chief economist at FNB Mamello Matikinca-Ngwenya said the 10-point jump in 2024 bodes well for the outlook for consumer spending for the remainder of the year.
In the second quarter, confidence was mostly driven up by a major improvement in the economic outlook sub-index on the back of a stable electricity supply.
The third-quarter uptick has mainly been attributed to improved sentiment among middle-to-high-income households.
“A confluence of positive developments has bolstered the confidence levels of South Africa’s more affluent consumers over the last six months. These include the formation of a Government of National Unity, the absence of load shedding, a stronger rand exchange rate, substantial fuel price declines, a deceleration in inflation, and expectations of interest rate cuts in coming months," said Matikinca-Ngwenya.
“Moreover, the implementation of the two-pot retirement system on 1 September now allows consumers access to a portion of their retirement savings, which will no doubt hearten households experiencing financial distress."
Earlier in 2024, the South African Reserve Bank estimated that the two-pot system could boost household disposable incomes by as little as R31 billion or as much as R79 billion in the fourth quarter.