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14 February 2018


SA’s economy looking up in 2018 – BankservAfrica

Optimistic start to the year with January’s economic transactional index showing year-on-year growth


 

Economic transactional activity increased at its fastest year-on-year rate in January and represents the fastest increase since August 2013. This is according to the BankservAfrica Economic Transaction Index (BETI), the broadest now indicator of South Africa’s economic activities.

 

“The actual number of transactions of 92.3 million that underpinned the BETI increased by 11.2% on a year-on-year basis, which indicates an underlying positive trend is starting to emerge,” says Shergeran Naidoo, Stakeholder Manager at BankservAfrica.

 

On a month-on-month basis, the seasonally adjusted BETI movement between December and January showed no change, however this is a step in the right direction towards improvement.

 

“This is the first time in nine months that monthly declines did not occur on a quarterly basis. This flat movement is significant as it shows that the economy is performing somewhat more positively,” says Mike Schüssler, Chief Economist at Economists dotcoza.

 

January, traditionally a quiet turnover month, experienced a quarterly seasonal adjustment change of 1.8% on the previous quarter,” says Naidoo. This change, which comes in line with the Christmas spending, is a positive reflection of the year-end sentiment that has helped to uphold this as the highest spending period in the country.

 

“December was the biggest turnover month in real terms for the South African economy and this can be attributed to the political leadership changes, which together with the strengthened Rand, lower inflation and fuel prices in January helped to give a slight boost to the economy,” explains Schüssler.  

 

However, the average value of BETI transactions in January fell by 1.1% in nominal terms to R8052, which is most likely a reflection of smaller players experiencing some turnover.

 

“The strength of real turnover growth creates a promising start for 2018 with the possibility of growth being ahead of the population’s growth,” says Schüssler.

 

Further fuel cuts in February are likely to add a further boost where all eyes will be on the Government Budget, set to be delivered in the following week.



“The actual number of transactions of 92.3 million that underpinned the BETI increased by 11.2% on a year-on-year basis, which indicates an underlying positive trend is starting to emerge,” says Shergeran Naidoo, Stakeholder Manager at BankservAfrica

Graph 1: The BETI and the SARB coincident Indicator

Source: BankservAfrica and Economists dotcoza

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Mike Schüssler has his sayMarket insights from
Mike Schüssler
Well-known economist Mike Schüssler has partnered with BankservAfrica and analyses our payment information.  Read his report for further commentary:
 

The BETI has a very good correlation with the SARB’s co-incident indicator and has an R squared of 0.95256 with no lag, coming out up to four months ahead of the co-incident indicator. (An R squared of 1 would be perfect.) The level of significance using the F distribution is higher than 97% confidence level.

The Durbin-Watson is 0.5333 which indicates that the BETI is a very good indicator of the current level of economic activity. Data dating back to the beginning of 2002 has been tested and it is believed that the BETI is a robust indicator of current economic activity.

The BETI was also tested against both overall GDP and GDP excluding agriculture. Excluding agriculture, it has an R squared of 0.97078 with GDP lagged by one quarter.

The significance of this data would be in excess of 95% and the Durbin-Watson is 0.63. (F statistic here is over 543 which, on some tables, indicate about 96% significance.)

With general GDP the BETI has a 0.9703 R squared and an even better F statistic, and a Durbin-Watson of 0.66. Again the BETI is ahead of GDP with one quarter.

The BETI is designed as an early economic scorecard which will give an overall trend in economic activity in the near term. It indicates that the economy is growing, but probably only around 3% on a year ago basis and gives us an economic scoreboard well before other data can. It is reliable and will in the future be a very important statistic on the economic release calendar.

The BETI is released on a regular basis, about ten days after month end and gives South Africans an insight into GDP growth levels.