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The local economy is shrinking, says BankservAfrica

The recorded economic transactions, measured by BankservAfrica, decreased from 127.3 to 125 points last month to reach the lowest actual level since February. Photo: IOL

The recorded economic transactions, measured by BankservAfrica, decreased from 127.3 to 125 points last month to reach the lowest actual level since February. Photo: IOL

Published Dec 15, 2021

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THE recorded economic transactions, measured by BankservAfrica, decreased from 127.3 to 125 points last month to reach the lowest actual level since February.

BankservAfrica’s head of stakeholder engagements Shergeran Naidoo said yesterday that at 125, the BETI Index for November was 2.3 points down from October and a further 6.2 point down from September. “In the last three months, the BETI numbers have weakened.”

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BankservAfrica processes and settles millions of interbank transactions daily, and provided a good indication of the movements in the South African economy through the BETI, which is a now cast indicator of the direction of the economic flow.

The authors of the BankservAfrica Economic Transactions Index (BETI) said that the annual change in the headline BETI revealed very little of the current circumstances. Meanwhile, there was a 1.7 percent quarterly decline while the seasonally adjusted real monthly change for the value of transactions shrank by 1.8 percent.

Economists.co.za chief economist Mike Schüssler said that with four of the past six months recording monthly real declines on a seasonally adjusted basis, and with one month recording no change, the current South African economy seemed to be declining again.

According to the authors of the index, load shedding had been a major challenge for the South African economy, along with other issues such as water outages and cable theft. They said that with load shedding rearing its ugly head again in November – the economic transactions slowdown was already felt in October despite the local government elections on November 1 providing some relief –load shedding before and after the elections had played a role in increasing inactivity in the economy.

Indicative of the growing preference for digital payments in South Africa, the number of transactions tracked in November were at 125.8 million. However, the average value per transaction was 8 percent lower year-on-year in nominal terms, due to the higher rate of inflation.

“The standardised nominal value of transactions remains above R1 trillion and stood at R1 061 trillion in November 2021 – the second-highest on record,” Naidoo said.

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Some of the transactional increases could be attributed to the full implementation of the DebiCheck system last month. DebiCheck seemed to have contributed to the 14.4 percent annual growth in transactions. However, Real Time Clearing (RTC) volumes increased by 63.3 percent, signalling the ongoing uptick in digital payments.

Another reason for the November transactional growth could be the Black Friday specials that ran throughout the month, as well as Cyber Monday.

“Overall, the BETI indicates that 2021 has been a year of two halves: the first half recording an increasing GDP and the second half reflecting a declining economy,” Schüssler said.

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Possibly, a better way to compare the BETI level was in the six months between May this year to last month, when the value of transactions declined by 3.2 percent. This decline from 129.2 to 125 index points illustrated the loss of momentum in economic transactions recorded by BankservAfrica.

The BETI also recorded a quarterly decline in September 2021, when South Africa’s economic GDP data registered a 1.5 percent fall as reported by StatsSA.

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Free Market EconomyGDP

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