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Cape Town - Ongoing economic volatility continues to hamper investor confidence in South Africa.
This is reflected in the latest BankservAfrica Economic Transaction Index (BETI), according to Mike Schüssler, chief economist at Economists dotcoza.
Schüssler told Fin24 that recent direct international investment data from the SA Reserve Bank (SARB) reflects the trend of the value of SA firms' direct investments outside the country being much more than that of foreign firms making direct investments in SA.
To Schüssler, that shows the current level of confidence as direct investments are not like stock market investments, which can be seen as a short-term activity.
"This shows foreign firms' slow unwinding of SA's investment position and you also find SA firms are actively looking at investing overseas - and we will see more of that," said Schüssler.
The BETI, which gives an economy-wide view of activity across the country, shows that September's economic transactions in the overall payment system declined 0.7%, after showing an increase of 1.5% in August.
“The contrasting performances between August and September are worrisome for economic actors, as planning in a volatile economy is not just difficult, but near impossible,” said Schüssler.
The index's change between the August and September was the sharpest decline since May this year, while the August increase over July was the highest and strongest since October 2015.
However, at 0.9% the BETI is still up compared with September last year, reminiscent for Schüssler of the gross domestic product (GDP) growth in 2016.
In his view, near constant declines and increases each month highlight that the economy is in uncertain waters.
“While the declines are a little smaller than before and the increases are becoming larger, the total lack of direction over the last three years leaves doubt over whether the economy will recover in the near term,” said Schüssler.
Quarterly growth
Quarterly growth remains positive overall, but “the poor performance noted in September dropped the current quarter-on-quarter growth from 1.9% to 0.6%”, according to Schüssler.
He said despite the poor performance in September, the yearly and quarterly changes have both improved for three consecutive months.
“The small positive trend must surely leave the door open to some hope in an economic recovery,” said Schüssler.
The average size of the economic transactions stands at R8 205. This is one of the lowest transaction figures in recent history, according to Schüssler.
He pointed out that these transactions include business transactions, for instance where businesses pay their suppliers. It also includes payments like rentals.
“While there are more transactions in the economy, the value of these is declining, even in nominal terms. This may be one sign that business role players are more cautious than before and highlights the uncertainty in the economy at present,” he said.
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