The real value of underlying economic transactions in South Africa showed no monthly change in July and reflects the persisting stagnant state of the South African economy, says BankservAfrica.
“The BETI for July was 129,9, the same as the index figure for June, and shows no movement,” says Shergeran Naidoo, head of Stakeholder Engagements: BankservAfrica. “The three months to July 2019 was also flat compared to the quarter to April 2019 with a -0,2% decline that is considered stagnant.”
The annual rate of the change of the BETI, however, was 2,4% up. But this was due to a very weak July 2018 which created a base effect impact.
“The transactional data suggests the economy is not in a recession, but stuck in a very low growth phase,” says Mike Schüssler, Chief Economist at economistscoza. “The July BETI shows a low growth economy that is on a very slow road with hills and dongas every few months. The downward phase of the business cycle is now likely to have lasted 68 months. Not only does the historical downward record lengthen every month but it is starting to make the next upswing slower to start with.”
This is evident in the record low unemployment figures and car sales slump. The latest Absa Purchasing Managers’ Index shows some growth, however, the BETI indicates the broad economy remains in the slow lane, but at least not stuck in reverse.
“At present the momentum favours the low growth environment as the World Economic data shows slower trade growth as a result of the trade war between the two largest economies in the world,” explains Schüssler.
The number of transactions increased by 3,6% on a year-on-year basis, according to Naidoo with July 2019 having one extra working day more than July 2018. This typically adds at least 2% to the actual number of transactions as weekdays have far more transactions than weekends and public holidays.
“The average value of all transactions was R8 890, which was 4,7% higher than July 2018. This increased for the fifth consecutive month on a year-on-year basis and reached the highest average value per transaction in nominal terms in the history of the BETI,” says Naidoo. “For the month of July, the nominal standardised value of the BETI was R886.3 billion while the actual number of transactions in the BETI was 104.7 million. These are stand out figures for July.”
Technology changing types of transactions
“The ability to make faster payments made possible by technology are spurring high growth transactions for Real Time Clearing (RTC), but declining cheque use as seen in the BETI data,” says Naidoo.
Debit transactions have grown, but slower as consumers are a little averse to longer term commitments. The pace of growth here is far below the inflation rate since at least the start of the year.
Non-Authenticated Early Debit Orders were in nominal decline for most months since the start of the year while Authenticated Early Debit Orders increased at double-digit pace in nominal terms.
General transactions from business via normal EFT channels were also growing slightly less than the inflation rate in nominal terms.
“The only real star in the payment space outside of Authenticated Early Debit Orders was RTC which grew by 42% on a year-on-year basis. RTC now is 74% of the size of debit transactions – up from 54% a year ago,” says Naidoo.
“But apart from the different types of economic transactions going through the South African banking system, the overall growth remains disappointing in real terms,” says Schüssler.