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The SA Daily 26 January 2018

Consumer key to 2018 growth

  • In 2017, economic growth was supported by moderating inflation and the recovery in cyclical consumption. This momentum should continue in 2018; we therefore see durable goods spending growth of 2.9% (see graph below).
  • We also expect credit extension growth, and likely modestly lower interest rates, to support consumer spending in 2018.
  • Lower average inflation should support real wage growth even if nominal wage growth should moderate further. However, the disinflationary benefit could fade in 2018, particularly for the lower income groups as, still low, food inflation drifts upwards.
  • SBR’s forecast is for consumers to make the biggest contribution to economic growth in 2018. Growth should increase from an estimated 1.4% for 2017, to 1.8% in 2018 (see SA Consumer Wallet 2018 by Siphamandla Mkhwanazi published on 23 January 2018).

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