The South African economy may be subdued, but it is still growing.
The March 2016 BankservAfrica Economic Transaction Index (BETI) showed a slight improvement on March 2015, but was significantly more modest than the February numbers. In February the month-on-month change was a very strong 2,2%.
The BankservAfrica Economic Transaction Index (BETI) measures South African interbank payment system transactions smaller than R5-million, giving a broad indication of the current South African economy.
“The March monthly change is a mere 0,4%, while the year-on-year change jumped up to 0,8%. This is because weak data from March last year inflates the calculation of the annual change,” explains Dr Caroline Belrose, head of knowledge and risk services at BankservAfrica.
Mike Schüssler, chief economist at Economists dotcoza, says the data for March this year is affected by the three public holidays that fell during the month, compounded by an early Easter. “Taking these holidays into account, we expected the March data to be a little stronger, while the opposite effect should be visible in April,” says Schüssler.
The BETI indicates that modest growth is still supporting the economy, with some decline seen in occasional months. “Essentially, this is typical stagnation, as economic growth remains weaker than population growth, meaning the average person is getting poorer,” explains Schüssler.
The actual underlying trend is for growth of less than 1% in the first quarter of 2016 despite the extra leap year day in February. The drought and the lower commodity prices are affecting the economy, although the impact is likely to deepen as many of these effects have yet to reflect on growth.
“When compared to March last year, the number of transactions grew by 3,7%, but the average value of the transactions declined by 1,1% to R8 451,” says Belrose. “The total actual transaction value was up 2,5% in nominal terms.”
BankservAfrica cautions that, while the South African economy is likely to show modest growth, given the weak January figures and the earlier-than-usual Easter holidays, a decline in GDP cannot be ruled out in the first quarter of 2016.
The two-year trend of weak growth and stagnation continues, and economic growth forecasts are very likely to decline further.