South African consumers are striving to eliminate their debt, yet in turn, neglect to save enough.
This is according to The South African Savings Institute (SASI) following the release of the South African Reserve Bank (SARB) Quarterly Bulletin, showing data up to June 2015.
Acting CEO of SASI Gerald Mwandiambira says it is unfortunate that the danger for most South African consumers who have debt, has been they end up being severely indebted, due to limited economic freedom.
"The picture emerging is that consumers are still slowly working at their debt situation, where you have seen a reduction in the debt as a percentage of disposable income, it has gone down from 78.3% to 77.8%. The worrying thing is there is no real correlation in that as they working to get out of debt, they are starting to save more," he says.
SASI believes that the Gross Savings as a percentage of GDP declined by 4% from 16% in the quarter ending in June this year.
Mwandiambira further adds that many corporates are starting to use reserves to try maintaining production despite slowing sales as well as increasing import costs due to a falling Rand.