BankservAfrica eyes lower SA growth ahead
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South Africa’s September economic transactions indicated a further slowdown to economic growth, which meant that the country’s gross domestic product (GDP) data for the third quarter of 2021 was likely to be far weaker than that of the second quarter, according to the BankservAfrica Economic Transaction Index (Beti).
The index, a fast indicator of underlying economic trends in the South African economy, fell by 6 percent last month.
This as the International Monetery Fund, in its latest World Economic Outlook this week said South Africa’s GDP would now grow by 5 percent this year, up from 4 percent previously forecast in July.
BankservAfrica’s Head of Stakeholder Engagements Shergeran Naidoo said this week that the headline Beti weakened from 13.5 percent in August to 6.5 percent last month.
“On a quarterly basis, the Beti declined by 0.6 percent, the first negative figure since July 2020 when the country was in the heat of the Covid-19 pandemic,” said Naidoo.
“The index for last month, recorded a quarterly decline of 0.6 percent which could translate into GDP growth of less than 1 percent. There is at least a 50 percent probability for zero or negative change in the SA economy’s growth value in the third quarter.”
The Beti provides a fast indication of underlying economic trends across the South African economy. It is also generally in sync with the country’s broader GDP changes.
Economists.co.za chief economist Mike Schüssler said after reaching a new record level in August this year, the Beti dropped back to levels slightly above July.
“It appears August 2021 was a catch-up after July’s unrest, and September’s data is a return to the usual trends,” said Schüssler.
The Beti change is the first quarterly Beti decline since July last year, during the Covid-19 pandemic. It is also a substantial decline from August’s record level.
The unrest in July and resultant slow insurance payouts may have caused September’s slump. The slow process has put a delay to businesses resuming their operations. The cyberattack on South Africa’s port IT systems, which slowed down operations for most of July and at the beginning of August, may have also played a role.
Schüssler said the massive increases in export commodity prices had also somewhat subdued as iron ore, platinum and gold prices decreased from the high levels in the second quarter.
“We believe the drop in these prices contributed to the Beti’s monthly decline of 3.1 percent, which was also the biggest since June last year.
“Added to this was the high fuel prices. As our main import, this may have resulted in some of the commodity windfall ending up with oil exporters.”
He added that it should be remembered that over the last year, the average value of primary exports sold was R28 billion per month more for the year to August than the previous year.
According to Schüssler, South Africa earned R336bn more on primary export products that were equal to the 6 percent windfall in GDP in a space of one year. He said that should the commodity prices not drop further, they could assume that September’s slowdown would be short-lived and economic transactions will pick up in a month or two again.
The standardised nominal value of transactions was R1 trillion while the number of transactions dropped to 122.5 million in September - the exact same number seen in the troublesome month of July.
The real average value per transaction declined by exactly 10 percent year on year, indicating transactions were becoming smaller and more people were migrating to electronic payments.
BUSINESS REPORT ONLINE