Slight economic recovery was observed last month, but it has become clear that the country’s gross domestic product growth for this year will be far below 3 percent and is more likely to be in the range of 2 percent, the latest BankservAfrica economic transaction index (Beti) showed yesterday.
The Beti, which tracks electronic and cheque transactions below R5 million between banks in South Africa, showed that the number of economic transactions in the country rose by 100 000 between October and November, delivering only a 0.2 percent improvement in the monthly index.
The nominal value of these transactions increased to R648 billion from R622bn in October. However, on a quarterly basis, the value declined by 2.9 percent. Year on year, the actual number of transactions grew by only 1.1 percent to 83.5 million in November.
The Beti recorded the largest fall on a quarterly basis since July last year and the slowest annual growth since the first quarter of this year.
It increased to 119.6 index points last month from 119.4 in October, essentially flat.
Transaction volumes indicated that the momentum in economic activity remained subdued and even the slight recovery was not enough to enhance growth to the levels that South Africa needs.
“It is clear that, going forward, improvements in growth are going to be critical in fighting the battle against unemployment as well as income inequality,” said Mike Schüssler, the chief economist at Economists.co.za.
The trade conditions survey, which was also released yesterday by the SA Chamber of Commerce and Industry (Sacci), showed a similar flat trend in the trade activity index last month. The seasonally adjusted trade activity index for the month was at the same level as in November last year.
Sales volumes and new orders were down to 58 index points from 61 a year earlier and 60 a month earlier, which explained the muted improvement in Beti transactions.
South Africa appeared to have shot itself in the foot with the motor sector strikes as the bounce-back of November last year was stronger than the weak recovery of last month.
“It shows that we underestimated the extent of the damage that the auto sector strike had on the economy,” said Azar Jammine, the chief economist at Econometrix.
The Beti and the trade conditions survey forecast a positive growth trend this month.
The Sacci survey’s seasonally adjusted trade expectations index further shows that the six-month outlook for sales volumes and supplier deliveries has improved. The employment prospects index shows that job opportunities could improve next year as it strengthened to 56 points from 51 points.
Jammine said he was not surprised to see this recovery as the latest figures on mining and manufacturing also showed a rebound and inflation numbers were lower than expected.
“This tends to suggest that we are possibly overly pessimistic. If you look at the inflation numbers, they show that the erosion of disposable income is not as severe as we expected,” he said. - Business Report