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13 September 2017


SA’s economic performance continues to fluctuate following poor September performance – BankservAfrica

Seesaw economic performance continues

 

The BankservAfrica Economic Transaction Index (BETI) for September highlights the continuing fluctuation of the South African economy after economic transactions in the overall payment system declined 0,7% after a very strong increase of 1,5% in August.

“The contrasting performances between August and September are worrisome for economic actors, as planning in a volatile economy are not just difficult, but near impossible,” says Mike Schüssler, Chief Economist at Economists dotcoza.

The BETI, which gives an economy-wide view of activity across South Africa, indicates that the continued economic volatility continues to hamper investor confidence.

Schüssler points out that the near constant declines and increases each month highlight that the economy is in uncertain waters. “While the declines are a little smaller than before and the increases are becoming larger, the total lack of direction over the last three years leaves doubt over whether the economy will recover in the near term.”

The change between the August and September BETI was the sharpest decline since May this year, whereas, the August increase over July was the highest and strongest since October 2015.

However, at 0,9% the BETI is still up compared with September last year, reminiscent to the GDP growth in 2016.

Schüssler highlights that quarterly growth remains positive overall, however, “the poor performance noted in September dropped the current quarter-on-quarter growth from 1,9% to 0,6%”. Despite the poor performance last month, he points out that the yearly and quarterly changes have both improved for three consecutive months. “The small positive trend must surely leave the door open to some hope in an economic recovery,” he avers.

The average size of the economic transactions stands at only R8 205, one of the lowest transaction figures in recent history. “While there are more transactions in the economy, the value of these transactions are declining, even in nominal terms. This may be one sign that business role players are more cautious than before and highlights the uncertainty in the economy at present,” concludes Schüssler.

 




“The contrasting performances between August and September are worrisome for economic actors, as planning in a volatile economy are not just difficult, but near impossible," says Mike Schussler, Economist

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.