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Christie Viljoen The South African Insurance Industry Survey 2016 | 21
Manager, South Africa’s weak economy
Financial Risk Management
Tel: +27 63 682 0217 and its impact on the
Email: christie.viljoen@kpmg.co.za insurance industry
Lullu Krugel “South Africa’s economy is characterised The moribund economy will grow by less than 1 percent this
by slowing growth, stubborn inflation and year, the worst performance since the 2009 recession. South
Director, macroeconomic imbalances,” commented Africa was until recently known as the continent's second-
Financial Risk Management the South African Reserve Bank (SARB) largest economy, but data released by the International
Tel: +27 82 712 4049 in its Monetary Policy Review (MPR), Monetary Fund (IMF) in mid-April suggests that it is now
Email: lullu.krugel@kpmg.co.za released during April 2016. The central bank placed third behind Egypt when considering the international
attributed the situation to three relatively standard of gross domestic product (GDP) in US Dollar terms.
persistent problems, namely: Fortunately, fourth-placed Algeria and fifth-placed Morocco
are still far behind.
- High levels of household debt;
Economists prefer to look at an economy from the
- Electricity supply constraints; and perspective of five factors: household spending, investment,
government expenditure, exports and imports - GDP data is
- An unfavourable global economic calculated by quantifying these factors. When considering
environment. low consumer confidence, weak business confidence,
a tightening of the fiscal purse and a heated political
Added to these issues are several short- environment, low international commodity prices, and the
lived shocks, e.g. strikes and the current adverse effect of a weak Rand on the import bill, it is not
drought. surprising that the South African economy is stuck in a rut.
The First National Bank (FNB)/Bureau for Economic
Research (BER) Consumer Confidence Index recorded a fifth
consecutive quarter of negative consumer sentiment during
Q1 2016. It was also the 13th out of the last 16 quarters that
