Uptick in money flow augurs well for SA's economy

Cape Town – The flow of money through South Africa’s financial system is showing signs of improvement, according to the BankservAfrica Economic Transaction Index (BETI), which suggests the economy could change for the better in 2017. 

The headline BETI in real terms reflected no drop on a month-on-month basis and remains at 124.4 – the same reading as in December 2016. It has however declined on a year-on-year (y/y) basis of -1% compared to -0.3% in January 2016. 

“Despite the annual downturn,” said BankservAfrica head of information services Caroline Belrose in a statement, "the latest BETI month-on-month results suggest that 2017 is off to a better start than 2016".

At the start of 2016, the economy was in freefall as was the BETI, which tracks the economy in near real-time via economic transactions on the banking system. The first months of 2016, in particular, experienced the worst start for the same period since 2008. Last year was certainly a weak year for the South African economy, Belrose said. 

READ: Warning of further decline in SA economy

Although it is too early to say, the latest figures signal a change in trend, said Mike Schüssler, chief economist at Economists dotcoza, in the same statement. “The improved rainfall in the northern parts of the country, together with the recovering commodity prices, suggest the primary economy’s prospects are faring better.” 

Other industry statistics, such as the January manufacturing purchasing managers' index and new car sales, support this notion. Both of these sets of data were in positive territory.  

Fin24 earlier reported that the Absa Purchasing Managers' Index has edged above 50 for the first time since July 2016, suggesting the manufacturing sector started the year on a relatively solid footing.

READ: SA manufacturing starts 2017 on a solid footing

The PMI, compiled by the Bureau for Economic Research (BER) and sponsored by Absa, rose to 50.9 in January 2017, up from 46.7 in December 2016. A value of 50 indicates no change in the activity, a value above 50 indicates increased activity and a value below 50 indicates decreased activity.

Real-time transaction volumes up 

The volume of BankservAfrica transactions which increased by 5.8% on a y/y basis also provides reason for optimism. 

This is the best growth experienced since May 2013. The nominal standardised BETI was up by 6.1% in January at R680bn. As inflation cancels the nominal growth, there are signs that nominal growth is speeding up too.

“Real-time transaction clearings were up 36% in nominal terms. It is in all likelihood that this reflects the change in which people transact. Real-time transactions are gaining ground very rapidly in the South African payments system,” Schüssler said.