South Africa’s GDP is predicted to show good growth for the first quarter of 2022

President Cyril Ramaphosa. Picture Jeffrey Abrahams

President Cyril Ramaphosa. Picture Jeffrey Abrahams

Published Apr 13, 2022


South Africa will experience good GDP growth in the first quarter of this year despite concerns about the inflation rate, BankservAfrica Economic Transactions Index (BETI) over the past months.

This was based on the positive numbers that emerged in this year’s first quarter including March.

BankservAfrica’s Head of Stakeholder Engagements Shergeran Naidoo said that the BETI reached an all-time high of 135.9 index points in March 2022. “Additionally, the 6.5 percent headline BETI change over the last year is solid, coming off the high base of the 5.8 percent reported on in March 2021,” Naidoo said.

According to this index, this high growth in the BETI for March this year corresponded with the vastly improved figures from new vehicle sales, the Absa Purchasing Managers’ Index, and other well-performing sectors during the month. It appeared that many

of the country’s main sectors in the South African economy–except for entertainment, travel, and tourism–had recovered from the long-term impact of the Covid-19 pandemic. chief economist Mike Schüssler said it should be borne in mind that the local economy had also been boosted by the high commodity prices and large-scale

government spending, as some confidence seemingly returned for businesses and consumers.

Moreover, the global rating agencies had recently lifted the negative outlooks for South Africa back to stable. Although the country’s ratings were still below the investment grade, the recent developments mark an end to the downgrading of the country’s ability to pay back debt.

In line with the March figures, the standardised nominal value of transactions in the BETI reached a new record high of R1.16 trillion in March 2022. The volume of transactions increased to 137.2 million to record the second-highest number recorded in the history of the BETI, according to Naidoo.

The number of transactions grew by 13.3 percent which, from a relatively high base, was again an indication of a strong economy. On a monthly basis, the BETI for March was 1.5 percent, which was lower than the monthly change of 2.2 percent in February

2022. The quarter-on-quarter seasonally adjusted increase for the BETI was 2.4 percent, indicating that the first-quarter GDP will be a strong positive.

Schüssler said: “Based on these figures, we believe that South Africa’s economic GDP figures for Q1 2022 will increase at its fastest rate since Q2 2021.”

According to the BETI, while some sectors could still struggle, the high commodity prices have certainly brought good news for South Africa. Additionally, the country’s inflation rate, at present, was about 200 basis points below that of the world average. This was the first time in 18 years that this has been the case.

The index said that with that being said, the Ukrainian crisis had led to a commodities crisis and higher prices. Additionally, inflation was rising above the upper inflation target of 6 percent. It said that this will slow down the economy and hurt local consumers’ pockets.

According to the index’s authors, while the higher fuel and food prices were expected to hamper consumer and business confidence, the BETI figures for March 2022 suggested economic role players may have pre-empted the increases and made provisional plans for

these in February and March. The BETI, which has a very strong correlation with South Africa’s GDP growth and the co-incident indicator of the South African Reserve Bank, forecasts South Africa’s economic GDP for Q1 2022 to have increased at its fastest rate since Q2 2021.

While not every sector has benefitted from the high commodity prices, the broader economy is growing strongly. The longer the commodity prices were high, the more the associated sectors would benefit.

“But, with the termination of the State of Disaster and most of the Covid-19 restrictions lifted in South Africa, more sectors could start contributing to the country’s growth efforts,” Schüssler said.


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