South Africa’s consumer confidence plunged to a 35-year low in the second quarter, moving deeper into the negative territory as the COVID-19 pandemic hammered the economy, a survey showed on Tuesday.
The consumer confidence index (CCI), sponsored by First National Bank (FNB) and compiled by the Bureau for Economic Research, slumped to minus 33 points in the quarter after registering minus 9 points in the first quarter.
The sharp deterioration in the CCI is only three index points shy of the all-time lowest consumer confidence level of minus 36 recorded in 1985, a year when the country witnessed violent resistance against apartheid and a partial state of emergency, the survey showed.
South Africa’s economy was already frail before the coronavirus outbreak hit the country in March, with its recession deepening in the first quarter of 2020 dragged by declining mining and manufacturing activities.
“Millions of workers were placed on unpaid leave or reduced pay, or even retrenched, as businesses scrambled to survive the lockdown – this severely constrained household income, and therefore consumers’ ability to spend,” Mamello Matikinca-Ngwenya, chief economist at FNB, said in a statement.
“Not even the cut-price specials offered by durable goods retailers or the substantial interest rate cuts by the SARB (South African Reserve Bank) seem to be enough to entice consumers to spend their money on durable goods or expensive luxuries.”
South Africa, among the countries that has the highest rate of infections in the African continent, shut down much of its economy at the end of March in one of the world’s strictest coronavirus lockdowns.
However, much of the economic activity was allowed to return to full capacity from 1 June.