South Africa’s FDI inflows fall in the second quarter, household debts rise

South Africa’s FDI inflows fall in the second quarter, household debts rise

JOHANNESBURG (Reuters) – South Africa’s foreign direct investment (FDI) inflows fell in the second quarter of 2022, central bank data showed on Tuesday, while household debt levels rose and consumer spending slowed.

In a quarterly bulletin, the South African Reserve Bank (SARB) said household debt as a percentage of nominal disposable income rose to 64.6% from 64.3% in the first quarter.

Consumers in South Africa came under pressure from April to June, as rising inflation pushed up food and fuel costs and soared interest rates hitting disposable income. Gross domestic product contracted 0.7% on a quarterly basis in the second three months of the year.

Real consumer spending growth slowed to 0.6% in the second quarter from 1.2% in the first quarter, with spending on durable goods and basic materials lower despite higher spending on services.

Foreign direct investment inflows declined to 26.2 billion rand ($1.46 billion) in the second quarter, down from 39.9 billion rand in the first quarter, reflecting foreign companies offering loans and increasing equity investments in local subsidiaries.

Inflows of portfolio investments amounted to 39.8 billion rand in the second quarter after inflows of 60.7 billion rand in the previous quarter. The central bank said that these inflows came as foreign investors bought more debt securities than they sold local stocks.

(1 dollar = 17.9796 rand)

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