South Africa’s economic transactions recovered in May, although at a slower rate. This is the second consecutive month in 2019 where transactional growth featured across all measurement periods, and suggests economic growth could be different for South Africa in Q2 2019.
The BankservAfrica Economic Transaction Index (BETI), which measures monthly transactions paid into the South African National Payments System, improved by 0,1% between April and May, according to Shergeran Naidoo, BankservAfrica’s Head of Stakeholder Engagements.
“The quarter to May increased by 1,1% from February while the BETI recorded a 2,4% growth on a year-on-year basis,” he adds.
Although the total number of economic transactions fell back slightly between April and May, the 101,6-million transactions in May was 1,2% higher than a year ago.
“The standardised value of transactions was R885,8-billion, which left the average value of transactions about 2,2% higher than a year ago,” says Naidoo. The value is lower than inflation and suggests that private sector role players are still under pressure. Many are not purchasing goods or procuring services at the rate they had previously.
“Much of these improvements stem from the bounce in April for economic transactions. Along with the small growth we are seeing in May, this could make for an increase in the Q2 2019 GDP,” says Mike Schüssler, chief economist at Economists dotcoza. “Just as the economic transactions crashed in the first quarter, we believe there will be some ‘catch-up’ in the second quarter.”
The two consecutive months of growth in the BETI indicates there will be recovery after the disastrous first quarter. Schüssler explains that the BETI was able to forecast Q1 as economic transactions declined sharply over this period.
“But one must remember that some of the April bounce was a ‘catch-up ‘- not really growth,” he adds. It is, however, still positive that the numbers are up. This suggest the economy is in growth mode – albeit a slow one.
“If there is no load shedding in the next few quarters, the economy will probably continue to grow – even if at a sluggish rate,” says Schüssler.
“The BETI, as a monthly broad ‘now’ indicator of the South African economy shows that the depressed first quarter was unusual but that the second quarter will show positive GDP growth. It also tells us that the South African economy needs more confidence and that the discussed measures need to be implemented urgently,” says Schüssler.