Johannesburg - South Africa’s gross domestic product growth is now lower than population growth, according to data from the latest BankservAfrica economic transactions index (Beti).
The Beti is the earliest indicator of the broad business cycle on the economic calendar and gives the quickest overview of growth trends.
While transaction activity, which the Beti tracks to detect economic expansion or contraction, grew last month, annual growth in economic activity slowed to 0.2 percent. The compilers, BankservAfrica and Economists.co.za, said this was the smallest change in economic activity since the 2009 recession and was lower than the country’s population growth rate of 1.2 percent a year.
The chief executive of regulated products at BankservAfrica, Brad Gillis, said even though the public holidays in April did affect economic activity, they could not be used as the sole explanation for the slowdown as not all businesses still closed on public holidays. And the Beti does adjust for the effect of public holidays.
The business confidence index released by the SA Chamber of Commerce and Industry yesterday also showed that last month’s public holidays did not have a negative impact on business mood. The index came in at 92.6 index points, 0.3 points higher than a year earlier but 0.1 points down from March.
The dull economic picture painted by the Beti did not even capture the full effect of the prolonged platinum sector strike on all of its data.
The Beti tracks all electronic and cheque transactions below R5 million between different banks in South Africa. BankservAfrica said the drop in transactions in the platinum sector was not fully reflected in the index as many metal sales fell outside this transaction limit. Had the impact been fully incorporated, the economic picture would be far more dire.
“The longer the strikes continue, the more the slowdown of economic activity becomes apparent,” said Mike Schüssler, the chief economist at Economists.co.za. He said the economy seemed to be caught between strikes and slow international growth.
BankservAfrica said as the Beti was a slight lead indicator of the economy’s performance, its data for this month could be even weaker.
“It will also show in the outcome of the long platinum strike. Past experience shows that the month in which a strike ends or the month after has been the worst economically. Based on this trend, it can be expected that a low will be shown in June rather than April,” the report read.
The index recorded a 0.7 percent month-on-month increase in economic transactions. However, BankservAfrica said transaction volumes may have received a boost from the election spending of political parties and related organisations.
The actual number of transactions was 83.8 million, up 3.2 percent from a year earlier, representing the weakest growth since January.
Furthermore, the nominal sum of transaction values was R647.4 billion last month, slightly below an adjusted R654.3bn for March. - Business Report