The South African economy continues to show signs of slowing down as indicated in BankservAfrica’s Economic Transaction Index (BETI) where economic transactions in July tracked lower across all reporting periods. These also indicate that the local economy is failing to track growth as positively as the rest of the world.
The BETI – the broadest now indicator of actual economic activity in the South African economy and based on interbank transaction data excluding salary and card exchanges – showed negative growth in July. The economic transactional data, according to Shergeran Naidoo, Head of Stakeholder Relations: BankservAfrica declined by 0.4% for July on a year-on-year basis, 1% down from the three months prior and by 0.3% in comparison to June’s figures. “The relevance of the BETI is that it is a strong indicator that people are under pressure and have adjusted their spending behaviour to weather the economic headwinds.”
“The BETI transactional value for July was 127.3. This is lower than any reading since March 2017,” says Naidoo.
“All of these show that the gains made in the economy in the second half of 2017 and in the first months of 2018 have been lost,” says Mike Schüssler, Chief Economist at Economists dotcoza. “These are not positive for economic growth particularly for addressing key concerns such as rising unemployment. The economy is caught between a slow growth and slow decline place and South Africa is not benefiting from the surge in economic growth currently being experienced in the rest of the world.”
Although the June 2018 quarterly data has been revised from -1.9% to -1.8% due to seasonal adjustments, it is still very unlikely the revised 1.2% economic growth anticipated by the South African Reserve Bank will happen.
“One would assume the current data suggests leadership changes in government has not yet had the positive impact one would have hoped for,” says Schüssler.
Meanwhile, the average value per transaction declined for 15 consecutive months. According to Naidoo, these declines are only surpassed by the data that followed the 2008/9 global financial crisis. However, the current declines are not close to the large double-digit ones in that period.
This decline in the average value of transaction is juxtaposed against number of transactions which is increasing. The number of actual transactions within the BankservAfrica Economic Transaction Index was 101.1 million in July. This was 9.5% more than July 2017, according to Naidoo.
“This growth suggests individuals and firms are transacting by electronic means. It could also demonstrate that more of the players that have recently entered the system are substantially smaller than those already in the payments system.
Therefore, while the total nominal transactional value increased by 3.9%, the average transaction value was less – even in nominal terms. This creates a strange situation in that actual real values are decreasing but more transactions are taking place.
The standardised BETI, which accounts for the number of days in a month, as well as weekdays, was R824.3 billion.
“The contrast is possibly reflective of the changing economy in South Africa. Although there is no evidence to make substantive assumptions, it does appear as though a number of small transactions indicate less volume buying and supports the theory that a greater number of ‘non-traditional’ roleplayers are participating in the formal economy – perhaps moving from cash to electronic means of payment,” ends Schüssler.
Please refer to the BETI report for additional details.