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Johannesburg - South Africa is likely to see strong gains in household expenditure in 2011 as much of the impact of lower interest rates is yet to feed through to the real economy, Standard Chartered head of Africa research Razia Khan said on Wednesday.
Interest rates have been reduced by 650 basis points since December 2008.
The recovery in private sector credit extension should underscore domestic consumption, Khan said.
"Increased state provision of social safety nets should go some way towards supporting higher consumption," she noted.
Some households continue to face challenges of unemployment and high debt levels, despite the economy's return to positive growth.
Khan notes that while large debt burdens may weigh down households, this will be offset to some extent by increased wealth effects.
While the picture for consumption looks promising, Khan said prospects for some sectors looked less certain, given the effects of the strong rand.
"Manufacturing is likely to remain vulnerable to any growth downturn in Europe," Khan said.
Growth in the sector has slowed in the past two months, and that has been largely attributed to the strong rand and industrial action.
Interest rates have been reduced by 650 basis points since December 2008.
The recovery in private sector credit extension should underscore domestic consumption, Khan said.
"Increased state provision of social safety nets should go some way towards supporting higher consumption," she noted.
Some households continue to face challenges of unemployment and high debt levels, despite the economy's return to positive growth.
Khan notes that while large debt burdens may weigh down households, this will be offset to some extent by increased wealth effects.
While the picture for consumption looks promising, Khan said prospects for some sectors looked less certain, given the effects of the strong rand.
"Manufacturing is likely to remain vulnerable to any growth downturn in Europe," Khan said.
Growth in the sector has slowed in the past two months, and that has been largely attributed to the strong rand and industrial action.
