August economic transactions confirm economy at odds

BETI data suggests the country’s economy ‘lacks direction’

The August BankservAfrica Economic Transaction Index (BETI) – a measure of all South African interbank transactions under R5 million – showed a slight recovery on July’s disappointing levels. 

August’s BETI showed a 1.4% year-on-year change – significantly higher than the -0.2% experienced in July, according to Dr Caroline Belrose, Head of Fraud and Data Analytics at BankservAfrica. 

“Most of this improvement, however, had to do with the low base established in the middle of 2015, when the economy was at a very weak point,” Dr Belrose explains, adding that it should be noted that on a six-month view, the August level is still below that of February. 

On a month-on-month basis, August achieved a 0.6% growth – indicating some recovery. However, this was still a decline on a three-month average basis. 

“The number of transactions in the South African payment system as recorded by the BETI, indicate that the economy is still volatile at present,” according to Mike Schüssler, Chief Economist at Economists dotcoza. 

The Q2 GDP was stronger than expected due to the weaker Q1 GDP results – a pattern that, in recent years, is emerging from the BETI data. 

However, the BETI also seems to indicate that the economy is changing direction on a monthly basis. 

“While some months have shown declines, others demonstrate increases. The economy is, therefore, transitioning between growth and decline on a monthly basis,” explains Schüssler. 

The only apparent business cycle trend is that there is a lack of clear direction. As the BETI is a very good indicator of underlying growth trends in the South African economy, it suggests uncertainty at present is amplified when translated into economic growth.   

Transaction growth is strongest in more than three years

Meanwhile, the number of transactions grew at the fastest pace in more than three years at 8.6%, according to Dr Belrose. 

The average value of the transactions grew at 1.5% only. In real terms, this has declined over the last seven months – an indication of economic stress.

The standardised value of the BETI reached R769.9 billion in August 2016. It grew by 9.5% the strongest growth in nominal terms since August 2013. After inflation is taken into account, the value improvement is similar to November and August 2015.