The BankservAfrica Economic Transactions Index (BETI), which measures the value of all electronic interbank transactions processed by BankservAfrica, recovered further in May 2024, contributing to a positive outlook for the economy in the second quarter.

However, there may be uncertainties in the months ahead due to the current coalition government discussions.

“The BETI recovered further to an index level of 136.2 in May, reaching the highest level since June 2023 and improved by 1.4% on a monthly basis,” says Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements.

Showing a third consecutive monthly increase, the latest BETI figure is an early signal that the economic performance in Q2 could surpass Q1.

“Since the end of March, South Africans have been load shedding-free, which has created a more productive economic environment, while the additional activity relating to the National Elections in May would have also played a positive role, partly due to additional workers temporarily employed in the run-up to the election day,” explains independent economist Elize Kruger.

An analysis of the BETI’s historical performance shows that in six of the nine elections under review, economic activity picked up in the month prior to the election month, while in eight of the nine cases (2024 included) the BETI increased in the election month itself.

While other developments in the economy are also reflected in the BETI, election-related spending could be seen to have made a meaningful impact on the monthly BETI in the period around election dates.

Looking at the BETI performance in the months after each election revealed that in four of the eight cases, the BETI declined on a monthly basis, remained unchanged in one instance, and only increased in three of the eight cases (2024 data is not yet available). Therefore, some slack in the BETI in June 2024, should it be realised, would not be unexpected.

Some divergence was evident among other nowcast indicators during May. Both the Absa PMI and new vehicle sales numbers plummeted, with ‘uncertainty due to the election’s potential outcome’ cited as one of the underlying reasons.

The Absa Purchasing Managers’ Index (PMI) made an abrupt U-turn, tumbling to 43.8 index points in May. According to the report, numerous respondents noted that orders were put on hold as clients awaited the election results.

Similarly, after only one positive figure in April (following eight successive months of falling numbers), new vehicle sales, as reported by the industry association Naamsa, were down by 11,6% compared to a year earlier.

On the other hand, the S&P Global South Africa Purchasing Managers’ Index (PMI) moved sideways in May, with an index level of 50.4. The accompanying report indicated a stabilisation in demand conditions in the private sector, while supply chains appeared to be on a better footing in Q2.

The standardised nominal value of transactions cleared through BankservAfrica in May 2024 increased to R1,301-trillion versus R1,29-trillion in April, while the number of transactions moderated to 155,3-million compared to 157-million in April.

Among the different payment streams captured in the BETI, PayShap was again the star performer during May. The cumulative number of transactions surged to 30-million in May since its launch in March 2023, as the gradual migration of transactions from legacy payment rails to PayShap by some of the participating banks, has contributed to the rising transaction numbers.

Overall, the BETI signals a continuation of positive momentum in economic activity in the first two months of Q2, a welcomed development following a dismal economic performance in Q1, with real GDP growth contracting by 0,1% quarter-on-quarter seasonally adjusted, as signalled by the BETI in March.

However, with the ANC having lost its majority vote in the National Election after 30 years at the helm, South Africa now enters unchartered territory with regard to coalition politics.

“The prevailing uncertainty about the outcome of negotiations and what that would mean for the economy’s prospects and economic policy in general, is keeping investors firmly in a ‘wait-and-see’ mode, especially relating to capital expenditure plans,” says Kruger.