SOUTH Africa’s economy bounced back in May to reach the highest level since August last year, according to the latest figures in the monthly BankservAfrica Economic Transactions Index (BETI).
This after experiencing some moderation in the previous month.
Shergeran Naidoo, the automated clearing house’s Head of Stakeholder Engagements, said the BETI increased by a significant 9.9 percent in May 2022 compared to a year ago.
The standardised nominal value of transactions reached an all-time high of R1.229 trillion in May. The number of transactions remained elevated at 132.9 million, the third-highest number yet recorded in a month and 15.7 percent higher than a year ago, Naidoo.
“The May reading was also a substantial improvement on the 4.9 percent- revised from 4.5 percent recorded in April.”
Following revisions to the seasonal factors, the actual level reached an all-time high at 143.5. The strong number was unexpected in light of the many headwinds that surfaced in the local economy over recent weeks.
Independent economist Elize Kruger said the recent BETI figures suggested that the underlying momentum in the economy might be stronger than generally perceived, even stronger than being reflected in other indices.
The Absa Purchasing Managers’ Index (PMI) increased to 54.8 index points compared to 50.7 in April (but still lower than the 60 recorded in March), suggesting a partial recovery in the manufacturing sector, a sector particularly hard hit by disruptions following the devastating flooding in KwaZulu-Natal in April.
The S&P Global South Africa PMI, which reflected activity in the broader economy, also recovered marginally in May, from 50.3 in April to 50.7, while new car sales rose by 13.8 percent year on year in May 2022. By the end of May, the total new vehicle sales in South Africa stood at 212 537 units, 12.2 percent higher than a year ago.
The strong commodity price levels, recent job creation and the relaxation of the Covid-19 restrictions on gatherings were some of the factors that cushioned South Africa’s economy from the negative forces of the intermittent load shedding, higher fuel prices and rising inflation and interest rates. Furthermore, the tourism, hospitality and accommodation sectors have also been supported by the reopening of the economy.
As forecast by the late BETI economist Mike Schüssler, South Africa’s quarter one (Q1) 2021 gross domestic product (GDP) growth, indeed, came in higher than the market consensus. At 1.9 percent, this grew at the fastest rate since quarter two of 2021.
In Q1 of 2022, the economy also recovered to its pre-Covid production level but notably lags in comparison to the other emerging and developing countries.
“The strong May 2022 BETI signals a continuation of the strong growth performance of Q1, which would be an encouraging outcome for an economy in dire need of sustained growth that could, in time, lead to more job opportunities and a dent in the highest unemployment rate in the world,” Kruger said.
Meanwhile, Alexforbes economists said in their Monthly Economics and Markets Review for May, also released on Monday, said GDP growth accelerated by 1.9 percent quarter on quarter (q/q ) seasonally adjusted in Q1 2022, from 1.4 percent q/q in the fourth quarter of 2021, as eight of the ten sub-sectors expanded while mining and construction contracted.
The size of the economy was now R22 billion, or 0.5 percent, higher than its pre-Covid-19 level.
“We expect GDP growth to track 2 percent this year and average below 2 percent over the medium term, given the uncertainty on the Russia-Ukraine war, moderating global growth and aggressive monetary policy tightening.”
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