There have been various reactions to the country’s junk status following the sovereign credit rating downgrade to BB+ by ratings agency, Standard & Poor’s, on 3 April 20171.
Predictions of the downgrade to junk status have been reported since the end of 2015, with a key risk factor, according to ratings agency Fitch, being the deterioration in GDP growth. Although political factors have also been identified by Fitch and have ultimately led to the downgrade, South Africa’s deteriorating GDP growth still has a big impact on ratings2.
According to the latest reports by Statistics SA, real GDP growth fell by 0,3% in the fourth quarter of 2016. A deteriorating GDP growth rate not only impacts ratings, but also impacts consumers directly as it results in increased unemployment, lower wages and added pressures to disposable income3.
“Consumers need to consider the possible effects on their pocket and take their own stand by ensuring they protect their personal finances,” says Derek Wilson, Head of South Africa’s first insurance and financial comparison website, Hippo.co.za.
Here are some tips on how consumers could survive, even in junk status:
- Bargain with businesses. Consumers should not merely accept prices of goods as they are displayed or advertised. A lot of businesses are willing to put their money where their mouth is, especially when it comes to beating a competitor’s prices. Don’t be afraid to mention that you could probably find a cheaper deal elsewhere.
- Consider switching. Loyalty is good, but money talks, especially in tough times. It’s a good idea to compare and shop around even if you have been loyal to a particular brand or company. If you can find a better deal, let them know you are considering switching and they may return the loyalty by offering a better deal. If not, at least you know you can get one elsewhere.
- Compare online. When it comes to online comparison sites there are many available on the market that allow you to compare everything from groceries and clothing to electronics and tech gadgets to insurance and loans. With Hippo.co.za alone, you can compare across the board from products like insurance, life & medical, finances, and home & utilities to travel, business, and motoring — all at your fingertips.
“Why not give your entire financial portfolio an overhaul? See where you can save by getting at least three quotes from different providers before you buy,” concludes Wilson.