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Transaction volumes volatile in a flat economy

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South Africa’s economic transactional activities – and economy at large – appears to be in a state of volatility with uncertainty among businesses and individuals being the only constant.
This is according to BankservAfrica’s Economic Transaction Index (BETI) for June, which indicates that the monthly transactional activity – as measured by BankservAfrica’s national payment system – grew by 0,4% between June and May after declining by -0,1% between May and April.
The June BETI, however, declined by 0,4% on year-on-year basis.
This downward trend has been continuing since October 2016 and is the lowest in that period. On a quarterly basis, the BETI reflected no change for the second consecutive month.
“This changing data suggests that economic activity wants to pick up,” says Mike Schüssler, chief economist at Economists dotcoza. “This, however, is being crushed by short-term shocks,.
“All these shifts give the impression that the economy is shifting when, in fact, it is not moving at all. It is flat.”
In the longer term, economic transactional activity is likely to be in a state of constant volatility. A retrospective view of the last 42 months show monthly changes on the BETI registered 45,2% in declines, 4,8% showed no change while 50% of the monthly movements showed growth.
Similarly, the South African economy declined by 38,5% in the quarters measured in this time period and grew 61,5% of the time. Moreover 23% of this period recorded GDP growth of less than 0,5% while 23% showed growth higher than the population growth of 1,7%.
“The constant change in direction of the BETI suggests that the economy will remain low to flat in the immediate future. The only constant at present is the uncertainty of both business and consumers,” says Schüssler.
The number of transactions, according to June’s BETI, grew by 6,7% on a year-on-year basis. This, together with May’s strong growth of 9,3% in the same period would usually be a good sign of South Africa’s economic growth.
However, the average value per transaction in nominal terms declined by 1,6% after posting a 1,1% decline on a year-on-year basis.
For the first time since 2012, the average nominal value per transaction declined for three consecutive months in a row.
“The number of South African economic transactions have lowered, even as inflation remains over 5%,” Schüssler says. “This could be due to the types of goods that are moving though the economy at present.”