JOHANNESBURG - SOUTH African growth indicators for April saw the highest and fastest growth on record, signalling a strong economic bounce back to pre-Covid levels, according to the BankservAfrica Economic Transactions Index (BETI) for April.
The BETI increased by 25.9 percent year-on-year in real terms, boosted by current higher commodity prices. The headline BETI is a reflection of the economy’s recorded changes annually. However, with the lockdown impact from April 2020 distorting the number somewhat, the short-term variations were important to observe BankservAfrica cautioned.
Economist Mike Schüssler and BankservAfrica’s Head of Stakeholder Engagements Shergeran Naidoo said yesterday that while the Index was encouraging as it signalled massive economic recovery to a more normal, pre-Covid19 state over the past year, true growth remained elusive.
“On a monthly level, the BETI improved by 2.3 percent. This is the strongest since February 2021, the quarter-on-quarter change was 2.7 percent, which is the most significant improvement since January’s quarterly change,” Naidoo said.
The April BETI showed that the economy was experiencing a massive economic bounce back that would remain for as long as low rates and government deficit spending kept money flowing through the economy.
“The economy is indeed recovering, but its levels this year are unlikely to surpass the previous high GDP (gross domestic product) level in 2019. More certain, however, is that the recovery is at a rate faster than one would have expected,” said Schüssler.
The spectre of power outages in the winter months could dampen growth prospects while some sectors, such as retail, might be affected by the government financial assistance that will fade in the next month or two, he said.
"Added to these are surging inflation in April and May, as well as the higher energy prices. There is also the possibility of a Covid-19 third wave."
Schüssler said it was worth noting that the economy was not in full swing as travel and tourism, entertainment and leisure were not yet in full operation.
“All in all, the BETI simply indicates that the economic recovery is fast and vastly better than one would have hoped for.
“However, the BETI and other leading economic indicators suggest South Africa is still in a recovery phase, which is similar to what we’re seeing in global markets. The BETI, therefore, reflects more recovery than new growth in the economy.”
BUSINESS REPORT