Guiding consumers since 2009

It's official: We are in a recession

By Staff Writer

Statistics SA released the quarterly Gross Domestic Product figures today. GDP has dropped by 6.4 percent! GDP is 'a basic measure of an economy's economic performance, [it] is the market value of all final goods and services produced within the borders of a nation in a year'. As such it is an indicator of how the economy is doing and is a very important indication of what the government might do to manage the economy next. This drop means we are in a recession. So what do these figures mean?

 

 

There has been some speculation that we are heading into a recession and these figures confirm that we have. Recession is defined as two consecutive quarters of contraction rather than growth. In a growth model based economy, contraction, recession and depression are the voodoo words of economic collapse. A growth based rather than sustainable economy will always be worried by lack of growth as many loans are based on the fact that the economy is expected to continue to grow. So in a growth based economy, and the government has signalled that it wants to follow a developmental model, we can expect the government to react to these figures by trying to boost the economy.

One of the methods that the Government has mandated is the Reserve Bank policy of inflation targeting. This is basically an interest rate strategy and we can expect the MPC (Monetary Policy Committee) to cut rates on Thursday 28th May 2009. The announcement will be broadcast live on SABC 3 from 15:00 to 15:30. The fact is we are in a recession and planning your budget has never been more important. Sound personal finance planning now will see you through the lean times ahead until the cycle turns and a new boom market is created. Of course in a growth model economy we will always have a cycle of boom and bust. So with no real change expected there, protect yourself now to survive the economic waves later.

Recent Articles

Featured New homeowner? Be aware of these extra expenses

You’ve overcome all the hurdles of buying a home. You’ve managed to pay your deposit and your closing payments, and now you’re a proud title deed holder. However, there are other expenses waiting around the corner. Are you prepared?

Your biggest credit conundrums – answered

Understanding your credit health is one of the most important factors in managing your finances. This is because it gives you insight into your debt, your borrowing ability, and your financial history. While many understand this, there are still many questions on how to do just that.

Avoid debt collectors, choose debt counselling

There are two things you can do when you are struggling to pay your debt. You can either let your creditors hand your debt over to debt collectors – or you can let debt counsellors help you deal with your debt.

Retail notes: easy investment option for new investors

Being a newbie in the world of investing can be challenging because you don’t know where and how to invest. With so many investment options, you could easily be befuddled. Justmoney looks at how retail notes can help you cut your teeth in the world of investing.   

Deals

Translux Student Discount

Price: Depends on destination
When: Daily
Where: Nationwide

Zimbali Senior Citizens Discount

Price: From R1342.00
When: Until 14 December 2019
Where: KwaZulu Natal

Free meal for kids at Mozambik Restaurant

Price: Free
When: Until 15 November 2019
Where: Johannesburg, Durban, Pretoria