The BankservAfrica Economic Transaction Index (BETI), a broad indicator of South Africa’s economic activity, increased in January at its fastest rate on a year-on-year basis since August 2013.
The actual number of transactions that underpinned the BETI increased by 11.2% on a year-on-year basis, indicating that an underlying positive trend is starting to emerge.
Although the seasonally adjusted BETI’s movement between January and December showed no change, it is a step in the right direction towards improvement. For the first time in nine months, monthly declines did not occur for three consecutive months. The flat movement between the January and December BETI change indicates that the economy is performing somewhat more positively.
While January is traditionally a quiet turnover month, the quarterly seasonally adjusted change for the three months to January over the previous three months to October 2017 increased by 1.8%. This change confirms a strong Christmas season, which is certainly good news as this is traditionally the highest spending period in the country.
December was the biggest turnover month in real terms for the South African economy. This positive trend is in part due to the political leadership changes, which benefitted the average economic activity through improved sentiment. The strength in the Rand, lower inflation along with lower fuel prices added to the slight boost for South Africa.
The average value of BETI transactions in January fell by 1.1% in nominal terms, most likely a reflection of smaller players experiencing some turnover.
The strength of real turnover growth, as gauged by BankservAfrica, reflects the strong possibility of the economy having a good start to 2018. After three years of weak growth – well below the country’s population growth – the start of 2018 looks promising.
Furthermore, the fact that there were three consecutive months in positive turnover on a monthly basis while the yearly and quarterly changes were also positive, gives the sense that the South African economy may just be able to beat population growth this year.
Looking ahead, the further fuel price cut in February will provide a small boost to consumers. However, all eyes will be on the government budget due to be delivered in a week’s time.