SA economy 'like stuck record' in record 5-year slump - report

There are signs that the SA economy has stayed in a downward phase for a record 59 months, the latest BankservAfrica Economic Transaction Index (BETI) has found.

The BETI report describes the SA economy as being like a stuck record that repeats the same limited movements – this despite a recovery in October after a "dreadful" September.

According to the report, September 2018 recorded the largest monthly decline since January.

Hope on horizon

The BETI does, however, offer some hope that the economy may be recovering.

The real value of transactions recorded the strongest monthly and quarterly changes since December 2017.

However, as the BETI has shown previously, one great data point does not make a trend or story, the report cautions.

"The SA economy is recording changes in direction on a monthly basis and often different sectors record opposing numbers on a regular basis," it states.

"The only consistency in the SA economy at present is that the economy is trending around the flat line by moving between increases and decreases."

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For example, the BETI recorded seven month-on-month increases over the last year and five monthly declines.

"There are no major forward or backward movements, just a lot of 'engine noise' sometimes offering hope and then stuttering to a halt again," the report reads.

"The country's other data points further emphasise this frustrating scenario. For example, vehicle sales were the highest in three years in October, while the Absa Manufacturing Purchasing Managers Index slipped to a 16-month low in the same month.

"The previous quarter’s mining production declined by more than 8%, while manufacturing increased by 7%." The actual index level for the BETI is still below the high reached in December 2017, and this indicates that gross domestic product (GDP) may be recovering on an annualised quarterly basis. Yet, on an annual basis the economy remains flat.

Data

The standardised transaction value increases by 7.9% in the latest BETI. The standardised transaction value accounts for the number of working days and weekends.

It reached R871.7bn in October. The number of actual transactions reached the highest level, with over 107.5 million transactions recorded being processed through the SA interbank payment system.

Transactions increased by 12.4%, but their average value declined for the 18th consecutive month. The decline in the average value of transactions was 1.1% compared to a year ago. This was the smallest decline since December 2017.

"The increase in the number of transactions bodes well for inclusive economic participation," states the report.

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