South African consumer confidence remains near two-year low - survey

Jan 14 (Reuters) - Consumer confidence in South Africa remained unchanged in the fourth quarter, after falling to a near two-year low in the previous quarter, as consumers continued to hold off on major spending amid economic uncertainty, a survey showed on Tuesday.

The consumer confidence index (CCI), sponsored by First National Bank (FNB) and compiled by the Bureau for Economic Research, stood at -7 in the fourth quarter, unchanged from the prior quarter.

Sentiment has taken a hit across the board, as household budgets are increasingly constrained by slow wage growth, high tax rates, and soaring electricity prices. The country’s medium-term budget policy has also made consumers conscious.

The policy delivered by Finance Minister Tito Mboweni at the end of October “highlighted a stark further deterioration in government finances, raising concerns about possible cutbacks in government employment, additional tax hikes for consumers”, FNB Senior Economist Siphamandla Mkhwanazi said.

There are also risks that credit ratings agency Moody’s may lower South Africa’s only remaining investment grade sovereign credit rating to “junk” status in 2020, Mkhwanazi added.

The agency left South Africa on the brink of the lowest investment grade in November.

The economy has struggled in the nearly two years since President Cyril Ramaphosa took office. However, it is expected to grow 1.0% this year and 1.4% in 2021, better than 0.4% growth in 2019, according to a Reuters poll of economists.

Africa’s most industrialized economy has also been suffering its most severe blackouts in a decade, as state-owned South African utility Eskom struggles to stay afloat. (Reporting by Pushkala Aripaka and Shanima A in Bengaluru; Editing by Subhranshu Sahu)