Joburg is the most upbeat

Johannesburg is the country's most confident city, with an optimistic score of 70,6 in the MasterCard Worldwide Index of Consumer Confidence.

This is higher than the country's overall confidence score of 59,8, and is 4,1 points higher than six months ago, despite shadows of doubt cast by the global economic downturn. Although the coastal cities of Durban and Cape Town took a huge knock during the economic meltdown, Joburg remained resilient, riding the global recession wave.

Durban's score plunged 39,2 points from 89,6 a year ago to 50,4, making it the least confident city in South Africa. Cape Town experienced a decline of 9,6 points from 66,7 to a slightly optimistic score of 57,1.

South Africans are less confident about economic activities or spending money because of the cloud of uncertainty cast by the global economic recession, according to the latest MasterCard Worldwide Index of Consumer Confidence survey. It reveals that South Africans in general are less confident than they were in January and July 2009.

The index was released on Thursday, 28 January at the Westcliff Hotel. It documents the latest consumer confidence scores based on five economic indicators: the economy, employment, stock market, regular income and quality of life. The index score is calculated with zero and under as the most pessimistic, 100 as optimistic and 50 serving as the midpoint because it denotes no change in consumer confidence.

It is conducted every six months and has been tracking South Africa for six years.

"On a positive note it should be pointed out that Johannesburg possesses a highly diversified economy with every sub-sector of economic activity contributing to overall economic output. The fact that the latest score for Johannesburg is 6,5 points higher than the last survey is a clear indication among the city's respondents that the economy has returned to positive economic growth," explained Roelof Botha, an independent economic forecaster.

Botha urged Joburgers to start spending again to boost the economy of the city and ultimately that of the country. "The recession is over. We should start spending money a little bit more [because] if we don't spend money there is no economy."

The latest survey was conducted from 1 October to 9 November 2009 and involved 10 623 consumers from 24 markets. Data was collected through internet surveys, one-on-one interviews and by telephone.

The MasterCard survey reveals that while South Africa recorded an overall drop in consumer confidence across all the major indices, the scores remained slightly optimistic for quality of life, which came in at 56,9; regular income at 66,8; 59 for the economy; and 53,7 for employment. Of the five indices that MasterCard measured for consumer confidence, only the stock market indicator presented an increase from 53,7 in the second half of 2009 to 62,6 in early 2010.

The survey shows that there is an overall decrease in consumer confidence in South Africa, which was 67,3 six months ago; almost a year ago during the same period it was 78,7. According to MasterCard, this is the lowest score recorded since the survey was first conducted here. The historical average over the last two years was 79,35.

The decline has been attributed to the global economic recession, the upsurge in unemployment and a national budget deficit of 7,6 percent.

"With an estimated one million jobs lost in the South African labour force over the past year and the South African National Treasury announcing a budget deficit of 7,6 percent of gross domestic product (GDP) in the 2009/10 fiscal year, consumers and businesses seem to have been hit harder by the global economic turmoil than it was first anticipated," said Anthony West, the general manager of Africa at MasterCard Worldwide.

However, Botha said it was likely that the country would experience a swift return to an economic growth path of 5 percent-plus in the current year. "Although the country managed to return to positive real GDP growth in the third quarter of 2009, it will take at least another quarter for some sectors of economic activity to fully recover," he explained.

"From an economic policy perspective, the survey results suggest that it would be wise to exercise caution with so-called exit strategies."

The MasterCard consumer confidence index was launched in 1993. It serves as a barometer of general consumer pulse. "This survey is fairly accurate. South Africa bucks the trend towards greater optimism," said Botha, forecasting an increase in future economic activity.

Economic factors that were augmenting the quality of life and might boost spending included progress on transport infrastructure upgrades, perceived benefits of the World Cup, commodity price recovery and lower inflation, and employment creation, which he said might begin in the early part of 2010.

Read more: http://www.joburg.org.za/content/view/4789/266/#ixzz0eSMNc12B

Posted at 10:17AM Feb 03, 2010 by Editor in Market  |