Following the devastating announcement by Stats SA on Tuesday 8 September that the South African economy has contracted by a historic 51% in the second quarter of 2020, the data collection service has also announced that household expenditure during the COVID-19 pandemic has shrunk by nearly 50% between April and June 2020.
They said that while consumers spent less in markets that were predominantly forced to close during the nationwide lockdown, communications services received a boost as South Africa’s workforce made the shift to remote working.
Stats SA GDP report outlines dire expenditure decline
Stats SA said that the measure on expenditure by households is key to establishing the country’s command of demand in the economy.
“Expenditure on GDP in the second quarter tumbled by 52,3% (seasonally adjusted and annualised), dragged lower mainly by falling exports and household spending,” they said in the damning report.
They said that the sudden drop in offerings from the tourism and hospitality sectors, as well as the closure of major retailers, led to a massive dip in consumer spending, with the aforementioned sectors grinding to a near complete halt.
“Household spending slumped by 49,8% in line with the closure of hotels, restaurants, transport services, recreational facilities and many stores,” they said. “Spending on restaurants and hotels ground to an almost complete halt, plunging by 99,9%.”
Acohol, cigarette bans notably influential
Stats SA made mention of the impact of the long-winded ban on cigarettes and alcohol that spanned the duration of the observed quarter, saying that these products were purchased extremely sparingly.
“The alcohol and cigarette bans had an impact too. Consumer spending on these items fell by 92,4%,” they said.
Alcohol producers were forced to rely on revenue generated through export channels during the ban, but this was little consolation for the billions in lost turnover experienced by the industry.
Communications services in hot demand during lockdown
One area where consumers were compelled to spend their money was the communication sector. With offices forced to close and many companies forced to pivot their operations to the homes of employees, it became essential that data and WiFi services were in place.
Stats SA said that an increased expenditure on data was most notably observed.
“Communication, housing and education expenditure was up in the second quarter. Cut off from family and friends – and having to suddenly work and study from home – many consumers increased their spending on communication services (most notably on data),” they said.
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