Reporting from Reuters Business Report :

“Growth in South Africa’s private sector credit is likely to have slowed further in August on the back of the country’s first recession since 1992.

A Reuters poll of 12 economist on Friday showed private sector credit extension (PSCE) is seen slowing further to 2.75 percent in the year to August — which would be the lowest rate of growth in more than 5 years — from 3.4 percent in July.

High levels of consumer debt and job insecurity have seen households cut back on credit, while company earnings have taken a knock.

The central bank has cut the repo rate by 500 basis points to 7.0 percent since December to help revive the ailing economy, totally unwinding increases in the two years to June 2008.

But consumers, who are dealing with rising levels of bad debt, have not felt the full impact of the rate cuts.

The rate of growth in PSCE has slowed sharply since peaking in October 2006 and a combination of tighter lending rules, introduced in June 2007, and highly indebted households hesitant to add on more debt helped to bring it down.

Encouraged by lower interest rates, two of South Africa’s biggest banks Standard Bank and Absa relaxed lending criteria for consumers and companies.”

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