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Johannesburg - It is plain that the South African economy is being held back by power outages and large fuel price increases, according to Mike Schüssler, chief economist at Economists dotcoza.
"While the actual petrol and diesel prices are still well below last year’s levels, the 14% increase in one month has certainly hampered confidence and spending power,” he commented after the release of the latest BankservAfrica Economic Transaction Index (Beti) on Wednesday.
“There is no clear shift in economic growth rates and, apart from February, the Beti indicates that growth remains lacklustre.”
"Just when it looked like the South African economy was picking up, it has slacked off again. We are halfway back to treading water," he told Fin24 on Wednesday.
"It is in part our own fault and we may be in another switch stage from a reasonable growth rate to a much slower one - due to power cuts and the higher petrol price tripping up the economy a bit."
He pointed out that the economy is, however, still growing.
"The March numbers were surprisingly good and we now have good manufacturing data and retail seems good," he said.
"SA needs a more coordinated approach to economic policy to get the economy growing and avoid even higher unemployment. One cannot have one minister talking about big industrialists and another about small farming."
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The decline in both consumer and business confidence seems to have carried over from the first quarter into the second, according to the latest Beti.
April numbers suggest that the strong increase earlier in the year - due to lower inflation - has faded.
However, compared to last year the Beti looks more stable and predictable, which is preferable to the volatile nature of the index in 2014, according to Dr Caroline Belrose, head of fraud and data analytics at BankservAfrica.
She pointed out that the Beti is the broadest and closest indicator to reflect on the total economy, including services, with a relationship of close to 100% with actual economic GDP growth.
“The latest Beti shows that, despite power cuts and recent fuel price hikes, the overall South African economy is growing, although at a somewhat pedestrian pace,” explained Belrose.
At present the economy is still on course for about 2% growth for the year and the second quarter. The growth over the last year is 1.9% which is ever so slightly up from the 1.8% growth seen in March 2015.
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Data from the last four months indicates that a greater number of transactions have taken place, but real growth inside the South African payment system remains slow. The year-on-year growth has been between 1.2% and 2.1% over the last five months.
“It is almost as if the growth in economic transactions remains range bound. This is why the Beti appears to stay the same, reflecting that, short of a major upheaval of some kind, the volume of economic transactions are just hovering around the same high as in the last few months,” said Schüssler.
Monthly numbers remain somewhat volatile, but the increase in April cancels out the decrease of the previous month.
After a disappointing decline for March in month-on-month growth, April reflects a positive growth rate, but at 0.3% this growth is still far from strong. The quarter-on-quarter growth is better at 1.8%, but seems to be due to the strong February numbers, when inflation was low.
While other figures released show a weakening manufacturing sector and fewer car sales, the Beti indicates that the economy as a whole is subdued rather than shrinking.
“The fact that there was positive growth in the first quarter means 2015 should fare better than 2014,” Schüssler added.
The number of actual transactions declined by 1.2% but the average value of transactions increased 6.7% over the last year. The total nominal value change was 5.4%.
The standardised Beti was R689.6bn, while the number of transactions came to R82.8m.
The Beti does appear to indicate that, despite the three public holidays, April 2015 was just an ordinary holiday month showing that the value of transactions is still growing at a subdued pace.
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