Brace Yourself for an Economic Catastrophe

South African middle-income groups should brace themselves for an impending economic catastrophe that would leave pervasive suffering and possibly even destabilisation in its wake.

Though economics may not be your cup of tea, considering that we may be in for a far-reaching economic catastrophe, a basic understanding of economic trends and events may prove critical in such circumstances.

China’s Declining Economy

For instance, what direct and indirect impact has China’s weakening economic growth had on South Africa? The direct impact has been that of commodity prices being forced down, as the Chinese consume the most raw materials in the world.

Secondly, China is South Africa’s largest single trading partner. Thus, weakening economic growth in China has an adverse indirect impact on the global economy. Experts have predicted that, should the Chinese economy not swiftly recover, we may be facing a new global recession, with a domino effect on all the world’s countries.

The Chinese economy is the second largest in the world. Whereas, emerging economies, such as South Africa’s are hit the hardest, when it comes to worldwide economic anomalies, as evidenced by the rand’s recent decline to a record low.

Mass Job Cuts

In the upcoming months, we’ll see the labour market destabilise, as trade unions compete by consistently lowering their commodity prices. As a result, 100 00 steel, mining and manufacturing jobs will be lost.

In South Africa the average employee supports 10 dependents, so these lost jobs will devastate the lives of a million people, leaving them homeless and starving. Owing to China’s minerals-intensive industrialisation phase, South African mineral prices skyrocketed. Though, China alone is not to blame for our country’s financial troubles.

By the time 2015 came around, our economic growth had dwindled down to under 1%, damaged by the energy crisis, labour strikes, investor hesitancy, political corruption, poor leadership and defective policies. Economic growth will surely collapse to 0% by 2016, if these trends persist.

Who Will Guide Us?

Violent strikes and political unrest are proof that the black middle class, the low-income working class, and the unemployed are enraged about the government’s failure to alleviate poverty and inequality. This economic crisis could not have come at a more explosive time. Our country may well be hit with full-blown destabilisation.

Quick-fixes will no longer hold the cracks in our foundation together and things are rapidly disintegrating. Clearly, the state lack the ability and willingness to see us through this economic catastrophe.

Then again, discussions about training programmes, substitute job prospects and soft landings with the mining and business sector indicate that a few state departments have the good sense to prepare for mass job losses. Perhaps, via sheer force of will, the private sector will inspire the government to finally get stuck in.

 What Should Consumers Do to Prepare?

Living frugally and settling debts are essential right now. It’s time to get one’s financial affairs trully in order. Having a basic grasp of economics will help you see things clearer, so you don’t overreact or feel paralysed by pessimism.

Take care of your personal life by strengthening bonds, mending bridges and treating your loved ones with respect, kindness and understanding, even when stressed, frustrated or infuriated. Stable relationships will keep your feet firmly on the ground so, when catastrophe hits, you’ll stay in one piece. Nurture your physical, mental and emotional wellbeing, and you’ll be ready for anything.

Lend a helping hand and be neighbourly where you can. Get involved with your community. Realise that you do not live in a vacuum and are a part of something bigger. We all depend on one another for survival and have unique contributions to make to our society.

Lastly, don’t hold back from saying your piece, standing up for what you believe in and blowing the whistle on wrongdoers, whether they are in a position of authority or not.