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11 April 2018

Transactional improvements point to SA economy’s recovery

BankservAfrica’s latest index reveals record performance underscored by positive business and consumer sentiment

BankservAfrica’s Economic Transaction Index (BETI) reached record levels in March with the actual number of transactions increasing to over 100 million for the first time ever. This, together with the growth in transactional values suggest the South African economy is on the road to recovery with downward movements previously experienced gradually coming to an end. 

According to Shergeran Naidoo, Head of Stakeholder Engagement at BankservAfrica, the number of transactions increased by more than 6% on a year-on-year basis for nine months in a row. The last three months have shown growth of over 9% in the number of transactions. On a month-on-month basis, the BETI increased with 0.4% and 0.3% on a quarter-on-quarter basis.


The BETI has also been on a positive upward movement since July 2017 and increased above the 3% level since December 2017. In March, the value of transactions recorded by the BETI increased by 3.4% on a year-on-year basis. This improvement can be attributed to the stronger purchases ahead of the VAT increase on 1 April.


“These figures support the view that the second longest downward phase of the South African business cycle seems to be coming to an end,” says Mike Schüssler, Chief Economist at Economists dotcoza.  This has had an impact on long-term average and potential growth which translated into lower job creation and lowered performance for the country’s economic drivers. “The improved BETI – on both a monthly and quarterly basis - suggests an upturn to the economic cycle is imminent.”




Although the increased consumer and business confidence in Q1 2018 have not reached positive levels, these are still significant. Car sales increased while the overall Purchasing Managers Index remained above the neutral mark over the last two months. These were boosted by improved positive sentiment in the financial markets, arising from lower interest rates and bond yields.


“Overall, the BETI is showing some positive underlying improvement in the SA economy,” says Schüssler. However, he cautions that April may see some pull back by businesses and consumers owing to the VAT increases.



According to Shergeran Naidoo, Head of Stakeholder Engagement at BankservAfrica, the number of transactions increased by more than 6% on a year-on-year basis for nine months in a row. 

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.