Almost no growth in SA economy this year

Dr Caroline Belrose, Head of Knowledge and Risk Services at BankservAfrica.

Economic transactions were up a mere 0.1% last month compared to January 2015 according to the BankservAfrica Economic Transaction Index (BETI), while quarter-on-quarter and month-on-month measurements are both down.

“The slowdown is now not only well established but most recent quarterly and monthly changes are indicating further declines are increasingly likely,” says Mike Schüssler, Chief Economist at Economists dotcoza. While it is certainly too early to say that South Africa is in recession, the number and value of transactions show a sustained slowdown over most of the last year and certainly also over the last few months, indicating that the economy is weak.

“This picture was possibly worsened by the month ending on a Sunday, meaning some month-end transactions may have been delayed to the beginning of February. But overall the BETI is still showing a declining trend,” says Schüssler.

While the previous months’ numbers were slightly more positive when compared to January 2016, a month-on-month decline was still evident. However, the speed of this decline increased steeply from -0.1% in December 2015 to -0.4% in January 2016.

Factors influencing the slowing economic activity include the weaker Rand, drought and a decline in foreign tourists. Declining new car sales and subdued manufacturing figures confirm the negative picture.

The last time changes were this weak was during the period of massive strikes in 2014. Interestingly, both credit and debit values last month grew below the rate of inflation.

“The number of transactions as captured by the BETI declined by 4.4% on a year ago, with a standardised value of R640.9 billion in nominal terms, which is 5.7% higher than in January 2015,” says Dr Caroline Belrose, Head of Knowledge and Risk Services at BankservAfrica.