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 South African economy,” says Schüssler. However, he cautions that April may see some pull back by businesses and consumers owing to the VAT increases.