South Africa hits a recession – what now?

Stats SA announced on Tuesday that the country’s real gross domestic product contracted by 0.7% in the second quarter of 2018. This follows a revised fall of 2.6% in the first quarter of the year.

According to Du Preez Grobler, FFG’s Managing Director, the local political uncertainty broadly contributed to the country’s difficult economic situation. “The agricultural sector was the hardest hit with a decline of 29% in the second quarter of 2018. It is also noteworthy to see a huge downturn in the construction industry. The proposed expropriation without compensation contributed to much uncertainty to agricultural producers with regard to the current market price of land. This is also a contributing factor to the negative perception of South African citizens towards the future of our country, and are therefore hesitant to take financial risks,” he says.

Grobler says although no one has the luxury of a fortune telling crystal ball, the current economic situation poses a lot of opportunities.  “I would suggest investigating opportunities within this perfect storm. Remember that everything that happens to us, is preceded by our own decisions. Explore, but be cautious to high risk. For the short run, I think South Africans are in for a bumpy ride. It is your financial planner’s responsibility to equip you with the best possible advice to be able to absorb the potholes in the best possible way.”

He says humankind has always been struggling with two possible situations – we either die too early or too late. “What financial planning is concerned, it is of utmost importance to structure and manage what you currently have, own and earn, to the best effective way as possible in order to address the above-mentioned situations.”

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