Latest BankservAfrica Index tracks Q1 2018 GDP figures of a weakened economy
The BankservAfrica Economic Transaction Index (BETI) for May reflected the most significantly noticeable monthly decline, since December 2016.
According to Shergeran Naidoo, Head of Stakeholder Engagement: BankservAfrica, the BETI declined by 2% between May and April.
“This is the largest decline since September 2013, and is a clear showing of the weakened South African economy,” he says.
Mike Schüssler, Chief Economist at Economists dotcoza believes that this could be a result of the declines of the BETI and the GDP speeding up. However, he cautions that it is too soon to assume this month’s decline is a long-term trend.
The standardised BETI, which accounts for the number of days in a month, as well as weekdays, was R817.5 billion in May.
For the second time in the history of the BETI, the number of transactions were above the 100 million level, says Naidoo. While this would have been a good sign for the economy, the downside is that the average value of transactions declined by 4.1%.
This is the 13th consecutive month in which such declines occurred. This is only exceeded by the period following the 2008/9 global financial crisis. “However, the declines are nowhere near the large double-digit declines of that period,” says Schüssler.
Therefore, while the total nominal transactional value increased by 3.9%, the actual transaction value was less – even in nominal terms.
“VAT increases, higher fuel prices and sugar tax have all had an impact on consumers,” says Schüssler. This was worsened by the bus strike which impacted on people’s ability to earn a living. Furthermore, the ongoing government wage negotiations, as well as those at Eskom, are affecting the formal sector’s wages, and dragging down consumer spending ability.
“The average South African consumer is once again under pressure and the high levels of confidence experienced in the first quarter of the year is likely to be lower on the back of the latest cost burdens,” says Schüssler. He adds that the recent GDP figure announcement, along with the large BETI decline, is of concern and should be closely watched by policymakers.
Please refer to the BETI report for additional details.