The South African economy’s decline into a recession, as confirmed by Statistics South Africa’s Q2 2018 GDP figures last week, has been evident in BankservAfrica’s economic transactional index for July with the latest data now pointing to some improvements in August owing to backdated salary payments, amongst others.
“The monthly BETI is a now indicator that tracks South Africa’s economic performance in near, real-time terms, using BankservAfrica economic transactional data against South Africa’s main economic growth drivers,” explains Shergeran Naidoo, Head of Stakeholder Engagement: BankservAfrica. “As such, by way of the BETI we were able to track the declines on both data sets that revealed the below par performance of the economy. There were, however, some changes on the BankservAfrica index such as the salary changes which led to an increase in consumer spending, and is reflected as growth in the BETI.”
According to Naidoo, the standardised BETI was R849,1-billion in August 2018 and the number of transactions reached a new record of 104,7-million. The increase in transactions could be the result of the continuous switch to electronic payments away from cash and card and the additional money that South African civil servants had to spend due to the delayed salary adjustment payments in July and August.
On a year-on-year basis, the BETI declined faster in August at -0,8% than in July 2018 at -0,6%.
“On this basis, it is evident the economy is still in decline. However, the quarterly and monthly measurements suggest the economy is looking stronger than previous months,” says Mike Schüssler, Chief Economist at Economists dotcoza.
According to Naidoo, the BETI’s rate of change turned into an increase of 0,5% for the quarter that ended in August compared to the corresponding quarter that ended in May. This compares to the -1,2% change for the quarter that ended in July 2018 against the quarter that ended in April 2018.
“This reflects the strong change in direction. However, one must be careful to believe this is a change in trend as these indications are only for the first and second months of Q3,” explains Schüssler. “However, if we are to go by August 2018’s data, this gives hope that the technical recession may not continue into the third quarter. This, however, cannot be confirmed as yet.”
On a monthly basis, the rate of change between August and July was 0,9% which is also a strong and positive improvement.
“One must remember that that this change may be due to the backdating of salary increases for civil servants in July and August as well as the late salary adjustments of Eskom employees and some municipal workers. We may still see delayed backdated payments occur in September, which will add to economic transactions improvements,” says Schüssler.
However, he cautions that one or even two months of data are hardly ever an indication of a change in trend. “SA’s economy is not out of the woods yet and even if there is growth in Q3 2018, this is unlikely to be very strong. The delayed salary increases have certainly played a positive role but once these are out of the system, the underlying downward trend may continue. Moreover, there is no confirmation as previous numbers were adjusted downwards as inflation was slightly higher than expected,” says Schüssler.