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< Education Statistics
Economics Main Page >

South Africa's household spending as a percentage of South Africa's GDP

Date: 8 March 2019
Category: Economics

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In this article we take a look at the total value of South African household spending and express it as a percentage of South Africa's GDP. Just how big a driver of South Africa's economic growth is consumer spending? Is our economy driven by consumers?

In China for example it economy in recent years have been driven by manufacturing and being a net exporter of goods. It is trying to increase consumer spending's contribution to its GDP. Has South Africa's consumer spending increased as a percentage of our total GDP over time. We take a look
Lady carrying shopping bags as we take a look at SA household spending
  • Inflation Heat Map
  • South Africa's GDP

Household spending as percentage of SA's total GDP

So yesterday we looked at South African household spending on various spending categories such as Durable, semi-durable and non-durable goods as well as services. A brief explanation of each follows.
  • Durable Goods: This tends to be furniture, household appliances, motor vehicles and computers and related equipment. It also includes recreational and entertainment goods (sports equipment etc)
  • Semi-durable Goods: Clothing and footwear, household furnishings (pillows, drapes, curtains etc), motor vehicle parts such as tyres
  • Non-durable Goods: Food, beverages and tobacco, household fuel, power and water, fast moving consumer goods such as personal care items (toothpaste, body lotions, deodorant etc)
  • Services: Rent, household services including domestic workers, medical services, transport and communication services, entertainment services, miscellaneous services (this includes insurance of all types, vehicle, household content and building insurance)​

We found that the bulk of South African household spending was towards services, with it making up close to 50% of total household spending.  Non-durable goods such as food was the second biggest expenditure category for South African households.

So why are we mentioning this? Well if we know what consumers are spending their money on, and we find that consumer spending is increasing as percentage of GDP we can isolate what is driving economic growth, is it services, non-durable, semi-durable or durable goods.

The line chart below shows the total Rand value of household spending per year since 1994. It also shows the total worth of South Africa's GDP each year since 1994. And lastly the dashed black line shows the percentage household spending makes up of South Africa's total GDP each year.

chart created with amCharts | amCharts
So based on the graphic above, and looking at the black dashed line in particular it is clear that household spending is increasing its overall contribution to South Africa's GDP. In 1994 household spending made up 54.2% of South Africa's total GDP. By 2018 this increased to 61.61%. So there has been a slow gradual increase in the relative importance of household spending in South Africa to the country's GDP. So a slow down in consumer spending will start to affect South Africa's GDP more than it did say 24 years ago. 

The question we have is whether household spending actually grew as a percentage of GDP due to it growing faster than other sectors in South Africa's economy, or are other sectors such as production and manufacturing and exports slowing or not growing as fast as household spending, which then leads to the relative importance of household spending increasing in South Africa's economy. To answer that one has to compare the overall growth rate of household spending from 1994 up to end 2018 with the growth rate of total GDP over the same time period. The summary below shows the growth from 1994 up to 2018 in both total household spending and South Africa's total GDP:
  • Household Spending: 116.3%
  • Total GDP: 90.32%

So household spending has increased at a faster rate since 1994 up to 2018 than South Africa's total GDP, and due to this its relative importance in South Africa's total GDP has increased. And not due to other sectors slowing down or growing at slower rate.In 2018 total household spending amounted to R1.937 trillion (up 1.85 on the previous year's R1.903 trillion). Total household spending in South Africa made up 61.61% of South Africa's GDP which equaled R3.14 trillion.

Note all figures were obtained from Statistics South Africa and uses 2010 constant prices.

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