The decline in the number of civil judgments for debt shows household balance sheets are on the mend in South Africa, an Investec economist said on Friday.
However, a substantial slowing in economic activity would slow this trend.
Annabel Bishop of Investec Group Economics was commenting on Statistics SA's finding of a 22.9 percent drop for civil judgments to individuals and an 11 percent drop in debt judgments to businesses, year on year, for October.
This meant that 38,800 people were issued judgments on their debts, compared to 50,000 a year ago, she explained.
"The historical average is [53,000] individuals a month, with figures of [60,000] during the 2009 recession, so October's monthly outcome indicates an improvement," she said.
Statistics for businesses indicated a decline in the number of businesses still struggling with debt repayments, with 3697 firms receiving judgments in October this year compared to 4156 in October 2010.
Interest rates were unlikely to be higher this time next year, and could be cut if economic growth began to stall, she said. The affordability of debt repayments could still be negatively affected even if rates were cut. This was because if there was a rapid deterioration in economic growth it would increase unemployment substantially.
The challenge to policy makers was to have further interest rate cuts to spur economic growth, but not to stimulate borrowing. (Sapa)
