South African consumers to face financial strain amidst Israel-Iran conflict
Rocket trails in the sky after Iran struck Israel with barrages of missiles, following a massive onslaught targeted the Islamic republic's nuclear and military facilities. The ongoing conflict between Israel and Iran is causing significant fluctuations in global oil prices, which could have dire economic implications for South African consumers.
Image: Ayad Baba / AFP
The escalating conflict between Israel and Iran is sending ripples through global markets, raising concerns over potential economic repercussions especially closer to home in South Africa and the impact on consumers in the country.
Frank Blackmore, the Lead Economist at KPMG, said that the overall impact will hinge on two pivotal factors: the scale and duration of the conflict.
Since the onset of the conflict, oil prices have already begun to rise, and Blackmore stressed the significance of this surge.
'An increase in oil prices traditionally translates to higher costs for transportation and goods, which the consumer ultimately endures,' he said.
In South Africa, where the economy relies heavily on oil imports, subsequent price increases could put further strain on inflation rates, potentially leading the South African Reserve Bank (Sarb) to maintain elevated interest rates for an extended period.
Blackmore further said, "If the conflict intensifies beyond what we are currently witnessing, the impact will be far more significant. If it is resolved swiftly, the effects on the markets will likely be limited. There are two avenues through which the impact will be felt. Firstly through the oil price. We have already seen an increase since the onset of the conflict. Secondly, through the exchange rate. The Rand has depreciated due to heightened uncertainty, which could lead to inflationary pressure on the local economy and the possibility of interest rates remaining higher for longer. Given that both oil and the exchange rate affect the impact of the cost of transporting people and goods around the economy, the inflationary impact will be shifted down onto the consumer in the form of higher inflation. The Reserve Bank may be forced to maintain elevated interest rates for an extended period."
Nigel Green, CEO of independent financial advisory deVere Group, said
the risks to global energy markets were growing, adding that even the threat of closure or interference would 'likely push oil well beyond $100 per barrel, reigniting inflation and altering the current trajectory of interest rate policy in developed economies.'
'Investors are clinging to a framework shaped by central bank support, solid earnings, and disinflation. But if energy prices rise sharply from here, that disinflation story evaporates. Rate cuts could stall. Market momentum could reverse,' Green said.
Adding to the woes regarding interest rates, the US Federal Reserve held interest rates steady for a fourth consecutive meeting this past week.
The possibility of interest rates remaining elevated along with the prospect of fuel prices increasing will leave South African consumers in a tough space.
According to a survey conducted by Debt Rescue, two-thirds of South Africa's credit-worthy consumers stated that they cannot repay their debt due to macroeconomic pressures beyond their control.
CEO of Debt Rescue Neil Roets, said that disturbing insights from the survey show that 41% of people have indicated that they have defaulted on their credit cards over the past year, while 30% have missed payments on retail store accounts.
'These are the two most commonly used forms of credit for day-to-day expenses because they are existing facilities which they have access to, which are now becoming increasingly unaffordable – while providing the only lifeline for many consumers,' Roets said.
In addition, survey outcomes show that 24% of those polled cited defaults on personal loans, with 31% attributing this to unexpected expenses and 21% to loss of employment.
'This points to the widespread financial distress many South African households find themselves in, due to economic pressures which have seen living costs skyrocket over the past few years while there has been very little in the way of financial relief in terms of interest rates, cost of living and tax reductions,' Roets added.
'65% of those surveyed said current economic conditions are significantly affecting their ability to repay debt,' he said.
BUSINESS REPORT
Visit: www.businessreport.co.za
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Daily Maverick
an hour ago
- Daily Maverick
Tapestries weave aspects of SA life and a bank's history with wool into today's artistic landscape
The Standard Bank Art Lab is showing that when it comes to art, the bank is not a sheep but a shepherd. The merino sheep is possibly the most consequential animal to the South African banking sector. The Spanish breed was first donated by the Dutch in the late 1700s, and its value to the growing South African economy was felt by the 1860s. The Cape Colony used the sheep's high-quality wool to distinguish and expand its economy. The booming industry would facilitate the establishment of one of the leading financial institutions in South Africa – the Standard Bank Group. This is a peculiar fabric of the blue bank's history, but nevertheless a pivotal strand that it continues to weave into its identity. The latest iteration is the establishment of the Standard Bank Art Lab. Situated at Nelson Mandela Square in Sandton City, the Art Lab reimagines how audiences engage with art through encouraging interaction that is up close, in motion and in dialogue with the present. The premise of the inaugural exhibition, Following the Blue Thread: It's Woven Into Who We Are, stitches those days of trade to today's artistic landscape. 'At Standard Bank, we believe that contemporary art is not peripheral to progress,' says Margaret Nienaber, Standard Bank's Group COO. 'Instead, it is central to how we see, shape and share our future. [Art provides] a space where legacy fuels innovation and where creativity is treated not only as a luxury, but also as a vital form of engagement.' Standard Bank has never been sheepish in its affinity for the arts. From its decades-long collaboration with the National Arts Festival to the renowned Standard Bank Young Artist of the Year Awards, South African arts across many disciplines have become stitched to the brand of the bank. The inaugural exhibition includes the work of past award winners in fine arts William Kentridge (1987) and Sam Nhlengethwa (1994), as well as household names such as Penny Siopis, Judish Mason and Mirriam Ndebele. A meticulous process of selection was undertaken by curator Dr Same Mdluli. 'At the core of its curatorial premise the exhibition threads together the tapestries as centring collections as a source for artistic appreciation and inspiration, but more importantly, a rich resource for both academic and curatorial research,' said Mdluli. Stitching together an exhibition Allina Ndebele's tapestry titled Ancestors was the first acquisition for the bank's corporate art collection in 1976. A colourful and vibrant tapestry depicting what can be interpreted as episodic anecdotal visual representations of African spirituality, folklore or history, it's the woven equivalent of a captivating nganekwane (Zulu fantasy story). Office Love (2001), Kentridge's contribution in collaboration with the Stephens Tapestry Studio, has a more modern and industrial outlook. With muted tones and dark silhouette imagery, the hand-woven mohair tapestry is an image of an everyman with a typewriter for a head, who is striding towards a workstation superimposed over what seems to be a map of Johannesburg. 'There is a worldview each of the tapestries present that resonates with a South African context in particular ways,' Mdluli said. 'This can be seen in how the work also presents symbolism employed by the artist in condensing a convoluted cultural myth and telling this through simplistic visual language.' Siopis's Shame (2003) and Nhlengethwa's Late Night Jazz (1994) best exemplify Mdluli's assembly of artworks that speak to varying yet deeply interconnected sociopolitical themes with enduring South African contexts. Late Night Jazz has eccentric visual undertones in its depiction of culture, fashion and perspective, evoking a sense of nostalgia that harks to the black diasporic influence on the youth of South Africa at the height of Sophiatown. It is both a warming and haunting reminder of how black people found joy amid the cruelty of apartheid. Shame, on the other hand, is striking in its use of red to depict a feminine figure gushing what seems like blood. Siopis is interested in what she calls the poetics of vulnerability. Considering the never-ending aggression South African women endure, the piece is chilling. When it comes to art, Standard Bank is not a sheep but a shepherd. The exhibition seamlessly connects different aspects of South African life. Its Art Lab is perfectly designed to be a space that values curiosity over convention, and community over exclusivity – a space where legacy meets possibility. DM
eNCA
an hour ago
- eNCA
Japan's high-tech sunscreens tap into skincare craze
TOKYO - When YouTuber Hannah Price set out to compare Japanese and Australian sunscreen, she wasn't expecting her deep dive into the subject to rack up over two million views. The huge number of people poring over Price's video shows the growing interest in skincare products from Japan, much like the K-beauty phenomenon from South Korea. It includes sun protection, increasingly recognised as a daily essential by influencers who want to shield their skin from ageing and enthuse about the lightweight texture of Japanese brands. Companies that have perfected their secret formulas want to capitalise on booming demand, including by building factories overseas and selling to Japan's record influx of foreign tourists. The habit of regular sunscreen use is spreading, especially among younger generations, said Takuya Wada, who works in marketing for Japanese chemical and cosmetics firm Kao. "There are no borders when it comes to obtaining information on social media, especially Instagram and TikTok," he said, adding that influencer posts have a "very large" impact on global sunscreen sales. AFP | Kazuhiro NOGI A boom in celebrity skincare brands has contributed to the industry's growth -- with A-listers like Kylie Jenner using social media to share their beauty routines, including sun protection, with hundreds of millions of followers. When it comes to sunscreen, country-specific regulations mean no single company dominates the field, as the entry barriers to new markets are higher. Kao's main sunscreen brand Biore UV is ranked 10th worldwide for sales, and second in Asia -- competing with the likes of L'Oreal and Beiersdorf, and Japanese rivals such as Shiseido. The company wants sales from sun protection to reach 35 billion yen ($240 million) in 2027, up 1.6 times from 2023. It plans to boost overseas production by opening three new sunscreen factories, in Indonesia, Brazil and Germany. It is technically difficult to develop formulas that block the rays effectively with a smooth texture, as demanded by Japanese consumers, said Takashi Fukui, research and development director for Kao skincare products. These days, Japanese women use sunscreen as everyday protection against sunspots and ageing, caused when UV rays penetrate into the skin, said Fukui. While summer is high season, sunscreen is popular year-round, because Japan has a "relatively high number of sunny days in the winter, and the sunlight hours are long".
IOL News
4 hours ago
- IOL News
From challenges to triumph: The story of Isabella Kobela and her daughter in the jewellery industry
In the vibrant world of jewellery making, Isabella Jewellers and Refiners stands out not only for its exquisite craftsmanship but also for its commitment to nurturing the next generation of artisans. Headed by Meiki Ncengeni, aged 35, and her mother Isabella Kobela, who is 63, this family-run business is paving a new path in an industry challenged by a skills shortage and market access barriers. Image: Supplied. In the vibrant world of South African jewellery production, Isabella Kobela (63) stands as a beacon of resilience and innovation. Trained as a goldsmith and a rough diamond evaluator, she embarked on her entrepreneurial journey in 2008 with just R2,000. What began as a small-scale jewellery manufacturing venture has since flourished into Isabella Jewellers and Refiners, a multifaceted enterprise that not only creates exquisite custom pieces but also pipes raw materials to wholesalers while engaging in eco-conscious refining and recycling operations. Isabella's journey resonates profoundly within a nation where economic opportunities for black female entrepreneurs are historically limited. 'I faced numerous challenges, from acquiring licenses to ensuring a steady supply of metals and gems,' Isabella said. Yet, with determination and creative problem-solving, she identified ways to refine her own materials, transforming obstacles into stepping stones. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading The entrepreneurship gene runs strong in the family, as Isabella was inspired to step into the sector by her father, who was a shoe repair man. In 2012, Isabella's daughter, Meiki Ngcengeni (35), joined the firm after earning her degree in Transport and Supply Chain Management. This marked the beginning of a powerful new chapter, with mother and daughter complementing each other's strengths: Isabella focuses on jewellery design while Meiki steers the company as CEO, overseeing finances and overall operations. One of the pieces created by the business. Image: Supplied. Their collaboration exemplifies a visionary blend of experience and youthful perspective, as Meiki builds upon the legacy her mother has crafted. The company stands out not only for its exquisite craftsmanship but also for its commitment to nurturing the next generation of artisans. Both women are ardent believers in continuous learning and improvement, seeking mentorship within the industry to diversify their skill sets. Their dedication has borne fruit through the De Beers Enterprise Development programme, which has empowered them with practical business tools, networking opportunities, and access to previously unattainable markets. 'This programme has been pivotal for our growth, helping us learn the intricacies of diamond buying, cutting, and polishing,' Meiki said. This knowledge isn't just enhancing their business operations; it is also facilitating job creation. Today, Isabella Jewellers and Refiners employs six individuals, three of whom are women, and has recently welcomed six students into a promising learnership programme aimed at cultivating the next generation of jewellery artisans. Over six months to a year, students will receive hands-on training covering the entire value chain of jewellery making, from traditional handmade techniques to advanced methods like Computer-Aided Design (CAD), setting, and casting. Entry into this programme is competitive. The selection process involves telephonic and in-person interviews to vet students, ensuring a diverse cohort dedicated to mastering their craft. This approach not only prepares graduates for employment but also empowers them to potentially launch their own start-ups in the industry. Some of the pieces created by the business. Image: Supplied. Despite these efforts, Isabella Jewellers faces significant challenges. One of the primary issues is access to the market. However, being strategically positioned in the O.R. Tambo Jewellery Manufacturing Precinct has enhanced their visibility and fostered connections with new clients. "Participating in initiatives like the De Beers Enterprise and Supplier Development programmes has opened doors to larger retailers and invaluable platforms such as exhibitions and trade shows," explains Meiki. Another challenge is the shortage of skilled artisans. To address this gap, Isabella Jewellers provides mentorship and business guidance alongside their training programmes. Drawing from their own experiences as beneficiaries of structured mentorship programmes, Meiki highlights their significant impact on sustainable growth. The tumultuous period of the Covid-19 pandemic underscored the importance of sustainability in business operations. For Isabella Jewellers, it prompted a reevaluation of their systems and financial accountability. By streamlining operations and automating certain processes, they have become more efficient and environmentally conscious. The incorporation of ethical production practices reflects their commitment to reducing environmental impact, demonstrating that growth doesn't have to come at a harm to the planet. As they continue to navigate the dynamic landscape of the jewellery industry, the Kobela duo stands ready to inspire others. Their journey exemplifies not just the triumph of entrepreneurship, but also the profound impact of women in business. 'We are laying the groundwork for future generations. We want to show that with passion and perseverance, anything is possible,' Meiki said. BUSINESS REPORT
