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South African household debt fell for the first time in nearly two decades in the second quarter as strict restrictions to limit the spread of the coronavirus affected spending and saving patterns.
Household debt fell to R2.27 billion from R2.3 billion in the previous quarter, according to central bank data. That is the first time the measure has declined since the third quarter of 2002 and is consistent with a sharp contraction in nominal spending and a decrease in outstanding balances of most categories of credit extended to households, said the South African Reserve Bank in its published Quarterly Bulletin. Tuesday.
Still, the ratio of household debt to nominal disposable income jumped to 85.3% from 73.6% in the three months to June. Data from the statistics agency to be released later on Tuesday is expected to show that the unemployment rate rose to a record 34.9% in the second quarter, as many companies cut their staff or closed permanently due to the restrictions.
A nationwide lockdown restricted activity in Africa’s most industrialized economy since March 27, leading to an annualized 51% quarter-on-quarter contraction in gross domestic product in the three months through June. Although a gradual and staggered reopening of the economy began as of May 1, business and consumer confidence continues to languish in multi-lows of the year.
South Africa’s economy entered an 82nd month of a weakening phase in September, extending its longest downward cycle since World War II, according to central bank data.
Portfolio outflows fell to R54.8 billion from a record of R97.6 billion in the previous quarter. That was due to net sales of debt securities and stocks by non-residents, as well as the redemption of two government bonds valued at $ 500 million and 30 billion yen ($ 284 million).
Foreign direct investment inflows totaled R17.4 billion, largely due to debt financing that international companies provided to their South African subsidiaries.
© 2020 Bloomberg
