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November 29, 2024

Private Sector Credit Extension (PSCE)

October 2024

In October 2024, credit extended by South African financial institutions rose by 4.3%, with increasing demand in most categories, despite remaining low overall. Recent interest rate cuts totaling 50 basis points may enhance property and fixed asset purchases in 2025 as consumers gain more disposable income, potentially boosting overall demand.

In 2024, credit extended by financial institutions in South Africa increased by 4.3%, following a 4.6% rise in September. This growth was slightly below the market’s 4.5% expectation for September. While credit demand rose across most sub-categories, it remains low, despite the interest rate reduction that occurred in September.

Mortgage advances and credit for acquiring fixed assets remain sensitive to interest rates, and the 25-basis point cut in September hasn’t significantly impacted property demand yet. The recent interest rate reduction in November, totalling 50 basis points for 2024, will likely take time to influence the market, with expected benefits becoming apparent in 2025 as households and businesses gain greater disposable income.

In October, instalment credit sales increased by 0.8%, up from 0.5% in the previous month, reflecting a year-on-year growth of 7.2%. Over the past two years, consumers have increasingly relied on short-term credit to manage financial pressures and rising living costs, as shown by a 4.8% increase in loans and advances, following a 5.0% rise in September.

Growth in asset accumulation through property and fixed asset purchases remains modest, with mortgage advances rising by just 3.1% in October. This slowdown in growth rates for mortgage advances in late 2023 is primarily attributed to the impact of higher interest rates on the property sector. However, the 50-basis point reduction in interest rates should enhance demand for properties and fixed assets in the months ahead, likely becoming evident in 2025. As lower interest rates translate to increased disposable income for consumers, overall demand for goods and fixed assets may also see a boost moving forward into 2025.


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A Balanced Path to Growth, Jobs, and Prosperity
South Africa faces significant economic challenges that threaten the nation’s stability and future prosperity. Over the past decade, sluggish growth, high unemployment—particularly among the youth—and infrastructure decay have become critical issues. These problems are compounded by inconsistent policies, energy shortages, and a prevailing uncertainty in the investment climate. The African National Congress (ANC) has recognised this urgency, unveiling a ten-point plan aimed at revitalising the economy. While this approach shows a concerted effort to address systemic issues, a complementary set of reforms proposed in the Alternative Economic Blueprint offers a promising pathway toward sustainable growth, job creation, and economic freedom.
September 2025
The South African International Liquidity Position, measured by Net Gold and Foreign Exchange Reserves, showed growth in both USD and Rand terms for September 2025.
August 2025
In August 2025, credit demand grew by 5.9%, slightly below the anticipated market prediction of 6.0% for the month. Since the initiation of interest rate cuts in September 2024, there has been a noticeable acceleration in overall credit growth, with most subcategories showing increases, particularly in July.
August 2025
International trade measures South Africa’s demand for foreign goods and services relative to its demand for domestically produced products in the global market.
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