SA can expect much softer growth in 3rd quarter
CAPE TOWN – South Africa can expect a much softer growth figure in the third quarter of 2019, according to the latest data from the BankservAfrica Economic Transaction Index (BETI).
This after South Africa’s gross domestic product (GDP) figures for the second quarter of 2019 turned positive, as BETI predicted it would. This is despite July’s figures being revised slightly higher due to the lower than expected inflation and producer prices.
BankservAfrica said in its report on Wednesday that declining economic transactions in August offered little hope of a 3 percent GDP growth recurring in the third quarter.
Shergeran Naidoo, head of stakeholder engagements at BankservAfrica said the quarterly and monthly BETI numbers both declined by 0.9 percent in August, however, August’s lower figures were most evident in the 0.7 percent annual rate of change – a major difference from the 2.7 percent increase in July.
“Although this is also due to a very strong August 2018, which created a slight base effect impact, the change is still substantial,” said Naidoo.
Meanwhile, the number of transactions decreased by 0.4 percent year on year in August 2019 and totalled 104 325 966, according to Naidoo. The average transaction value was R8 647. The nominal value of the transactions increased by 4.3 percent year on year. The real transaction value was very flat as the expected rate of inflation was 4.2 percent.
Chief Economist at economistscoza Mike Schussler shared the same sentiment, saying that the data strongly suggested third-quarter growth would be softer. “The August BETI and slow July and June show that the second quarter was more of a ‘bounce’.”
The BETI, which has been showing a fragile economy over the last five years, now shows a very stagnant economy. “The economic transaction trend does not reveal a recession but rather a flat or declining economy. One must remember that we have one more month for the third quarter data, and that leads and lags can influence the relationship between the BETI and GDP growth,” he said.
The SA Reserve Bank on Tuesday said the economy was not expected to grow more than 0.6 percent in the current year, and while the country avoided a technical recession it was still facing downward pressure.