‘Economic growth, cycle remains weak’

Dr Caroline Belrose, Head of Fraud and Data Analytics at BankservAfrica.

BankservAfrica Economic Transaction Index (BETI) records R739.8 billion in transactions, 10.2% higher than November 2014.

The BankservAfrica Economic Transaction Index (BETI) numbers for November – which correlate closely to South Africa’s GDP figures – indicate that the overall economy is being affected by lower commodity prices and tourist numbers; labour action; a weak currency; and bearish financial markets.

Growth – though present – is weak, the figures indicate. “The BETI shows that the economy is still growing, but at a very slow pace. Mixed outcomes over different periods indicate that the economy is still marginally positive,” says Mike Schüssler, Chief Economist at Economists dotcoza. “Overall the BETI data is weak and South Africa remains close to recessionary conditions.”

The BETI grew 2% year-on-year, and on a monthly basis by 0.1%. “However, viewed from a quarterly perspective, the BETI remains in decline, creating a conflicted picture,” Schüssler explains. “The distorted image is a result of the fact that the different periods of measurement reflect weak business conditions and a cyclical downswing.”

Indicators such as the manufacturing purchasing managers index (PMI) show further declines in November, but new cars sales show minor increases. As such, there are no strong economic signals that indicate any turn around in the present economic cycle or business conditions.

Slower inflows of funds based on the weaker commodity prices are impacting the export earnings of the South African economy. However, this has been offset somewhat for consumers by 13 months of year-on-year declines in the retail petrol price, as well as lower inflation, meaning there is some more disposable income available in households.

“Overall the number of debit transactions has shown poor growth for nine out of 11 months for 2015 with the value of these debit transactions struggling to grow in real terms, indicative of weak household credit growth over the last few years,” says Dr Caroline Belrose, Head of Fraud and Data Analytics at BankservAfrica.

This indicates that South Africans are consolidating and reducing their debt levels and are reluctant to take on new debt agreements – a sure sign that banks and households are becoming more careful about managing household debt.

Credit transfers are still growing in real terms and this is probably a good indication that the savings of debt repayments are being replaced by direct purchases by electronic means. This is indicated in the BETI figures, which, in November recorded R739.8 billion in transactions, 10.2% higher than the previous year.