Economic growth remains weak and is likely to remain in the doldrums as indications of further declines in GDP growth in the third quarter are likely.
This is evident in the September BankservAfrica economic transaction index (BETI) transactions which remains in volatile territory, reflecting a decline of 1,3% between September and August. The actual level of the BETI in real terms is the lowest since May 2017.
“Unfortunately, it seems that the South African economy is oscillating between a decline and growth nearly on a monthly basis,” notes Shergeran Naidoo, head of stakeholder engagement at BankservAfrica. “As a now indicator, the BETI has a close relationship with the GDP and provides the quickest now-casting reflection of the South African economy.
“The standardised value of all transactions of the BETI was R840,5-billion in September 2018, a nominal increase of 2,8% on a year ago. The average value per transaction in September was R8 271, which is less than 1% higher in nominal terms on a year-on-year basis.”
According to Naidoo, even though the number of transactions increased by 2% on a year ago, a concern for BankservAfrica is that the actual number of transactions declined below 100-million again for the first time in five months.
“The fact that the South African business cycle’s downward phase is the longest since before World War Two, indicates that growth will remain weak,” explains Mike Schüssler, chief economist at Economists.co.za.
Schüssler notes that there are indications that the backdated salary increases of civil servants working for state-owned entities, such as Eskom and municipalities, could help ward off a further lengthening of the current recession.
“Furthermore, inflation levels are expected to be around 5% in September, which indicates that September 2018 reflects a decline in average transaction values. As such, we believe the economy remains in the doldrums,” he adds.