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Cape Town - The latest BankservAfrica Economic Transaction Index (Beti), which is usually a good barometer of growth trends within the economy, suggests a further decline in the South African economy.
The Beti a measure of all South African interbank transactions under R5m – shrank significantly in October on a monthly and quarterly basis, according to BankservAfrica’s latest Economic Transaction Index (Beti).
“The month also reflected the most negative quarterly comparison for the Beti, declining by 1% on the quarter from July. The quarterly comparison has been in decline for six months in a row,” said Dr Caroline Belrose, head of fraud and data analytics at BankservAfrica.
"The monthly decline was 0.9% between September and October - the same as the difference between September and August 2016."
While these do not necessarily confirm that the overall economy is in a state of decline, the Beti is known for indicating growth trends within the economy. The latest Beti results, if any, reflect the economy’s continuing downward movement. That said, it is also still too early to state that the overall economy is shrinking.
However, the signs are certainly leaning towards a further decline in the South African economy more than before. If economic activity levels decline again, it will be the second quarter this year in which the South African economy contracts.
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It is concerning as the fourth quarter is usually a forecast of the likely performance in the next year - going by October’s Beti results, weaker growth can be expected in 2017. This is in line with the latest manufacturing Purchasing Managers’ Index which indicates the manufacturing sector is in a state of decline.
“If economic activity levels decline again, it will be the second quarter this year in which the South African economy shrinks,” said Mike Schüssler, chief economist at Economists dotcoza. The last three months leading into 2017 usually forecasts the economy’s performance in the New Year.
The latest take-home salary levels are under severe pressure, having a direct impact on subdued retail sales. Along with new car sales and real estate transactions, all signs seem to indicate the South African domestic economy is very subdued.
The latest manufacturing Purchasing Managers’ Index also indicates the manufacturing sector is in a state of decline. This, together with the latest take-home salary levels, which are impacting retail sales, along with new car sales and real estate, are further indications of the economy’s downward movement.
“Although it is still too early to say that GDP growth in fourth quarter will be negative – it is evident that the third quarter will be weaker than that experienced in the second quarter. This is clear from the Beti data as well as other sources of economic data,” explained Schüssler.
