South African households becoming poorer as economy stagnates. Here’s how this trend can be reversed

South African households are experiencing a decline in net worth, with a decrease of 237 billion rand in the third quarter of 2019 compared to the previous quarter. Johan Van Turen, a researcher and economist at Momentum, attributes this decline to geopolitical events and the struggling economy in South Africa. Van Turen suggests that there are simple solutions to the country's economic crisis, such as exploring unorthodox methods like borrowing from the state pension fund to address the fiscal deficit and reduce budget deficits. He also emphasizes the importance of wealth accumulation for households, as it plays a crucial role in improving living standards and contributing to economic growth. However, despite the stability in wealth levels over the past five years, the need for growth, job creation, and increased participation in the economy remains critical to ensure a prosperous future. The decline in net worth is attributed to international events impacting financial assets, as well as local challenges affecting residential properties. Van Turen highlights the trade war between the US and China, concerns about a potential US recession, Brexit, and other global factors that have negatively influenced share prices and financial assets. On the domestic front, issues like state capture and economic instability have led to a stagnation in residential property values. While the causes of the decline in net worth are multifaceted, Van Turen points to both international and local factors playing a significant role in the economic challenges faced by South African households. Moving forward, addressing these issues and implementing solutions that foster wealth creation, job growth, and economic inclusivity will be crucial to reversing the current trend of declining net worth and promoting financial stability for households in the country.