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Saving your bonus for your bond

The last two or three months have seen almost all international financial analysts revising their forecasts downwards for the next 12 months. 

The IMF (International Monetary Fund) predicts that the Asia-Pacific region will see a 1% fall off from its current levels, China’s economy, although still healthy, will slow by 0,3% to 7,3% (well below its previous high levels) and India will be down by 2% from its former rate of 5,8%.

Most importantly of all, the USA, which has always been the pace setter, will, it is now forecast, show only a 2,6% growth in 2014 (admittedly an improvement on its previous growth rate).

Globally, says the IMF, the expansion will be at a low 2,9% this year and 3,6% in 2014.

Doing the latest figures and discussing the outlook for South Africa, and in particular the South African residential sector, Tony Clarke, Managing Director of the Rawson Property Group, said that it has to be accepted that the South African economy will feel the impact of the global economy’s sluggish growth rate – and, he said, we should all budget accordingly.

“For some time now,” said Clarke, “middle class South Africans have been overindulging their liking for luxury, less important items, especially cars, clothes, furniture, household appliances and entertainment. This has had a disastrous effect on home financing – some 45% of bond applicants are rejected because investigation reveals that they have either defaulted on credit accounts or are committed to too much ‘extraneous’ expenditure. The net result is that far too many people are now reconciled to renting in perpetuity. The whole situation has to change if South Africa and its economy is to benefit.”

A good first step in a reform programme, said Clarke, would be to put all employee bonuses into bond or savings accounts this December. Some people, he said, will say that this could create a negative austerity atmosphere over the festive season, but that need not be the case.


“Good fellowship and happiness are not dependent on cash flow and high incomes. A move to cut back in a big way on spending could set the tone for many people for the whole of 2014 and would, I am convinced, lead to more peace of mind and more contentment all round.”


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