According to the Medium Term Budget Policy Statement (MTBPS), released today, challenging global and local economic environments are increasingly being felt at both household and individual level.
Household consumption growth has slowed from 5.0% in 2011, and is forecast to average 3.4% in 2012 and 3.5% in 2013 owing to sluggish job creation, elevated debt, and limited growth in real disposable income.
Consumer indebtedness stands at 76% of gross disposable income.
According to Treasury, the value of new unsecured credit granted to households in the second quarter of 2012 was 36% higher than during the same period in 2011. Most of the increase reflects larger loans over longer time periods.
The MTBPS states that levels of unsecured lending do not currently pose a significant risk to financial stability. However, measures to improve responsible lending and borrowing are required to support access and affordability of credit.
Treasury says the garnishee system requires attention, particularly in lower- and middle-income communities. “Financial sector regulators are investigating these matters. The forthcoming “twin peaks” regulatory reforms in the financial sector should help ensure better coordination among regulators.”
– By Christelle du Toit
