Global Courant
The BankservAfrica Economic Transactions Index (BETI) fell slightly in May 2023, marking the third decline in four months and signaling the economy’s flat growth trend.
The BETI reflects the standardized value of all economic transactions in the South African economy at seasonally adjusted real prices.
“BETI fell to an index level of 132.3 in May compared to 132.7 in the previous month,” said Shergeran Naidoo, Head of Stakeholder Engagements at BankservAfrica.
“On a year-over-year basis, BETI weakened by as much as 7.4% in May 2023 compared to April’s revised 3.6% decline.”
BankservAfrica said the decline in May shows that the recovery in April would not initiate a sustained upward trend.
In May 2022, BETI was up 3.9% month-on-month to hit an all-time high of 142.9, which was driven by the strong post-Covid recovery.
“Over the past year, BETI has moved sideways with some month-to-month volatility. From June 2022 to May 2023, BETI declined monthly in nine months out of 12, indicating an economic scenario of stagnation,” independent economist Elize Kruger added.
She added that the economy is continuing its “mud-along-little-thriving” story.
BankservAfrica said the economic environment was extremely challenging in May, with recent statistics showing South Africa has been without power for 27% of the year, compared to 9.5% in 2022.
In addition, the South African Reserve Bank hiked interest rates to a 14-year high as the rand hit new lows amid tensions with the West supplying South Africa with arms to Russia.
The cost of living in South Africa remains high and the global economic slowdown is still having an impact.
BankservAfrica said the BETI’s decline is in line with other nowcast indicators. The Absa Purchasing Managers’ Index (PMI) fell from 49.8 in April to 49.2 in May. The PMI has now been below the neutral level of 50 for four months in a row, also pointing to stagnation.
In addition, the standardized notional value of transactions cleared through BankservAfrica fell from R1.22 trillion in April to R1.18 trillion in May.
Although the number of transactions increased from 35.9 million in April to 147.2 million in May 2023, this was due to more trading days in May.
In previous months, BankservAfrica said Q1 2023 could see negative quarterly growth, with a March BETI down 1.9% from the previous quarter. However, the financial, mining and manufacturing sectors helped the economy grow by 0.4% in the first quarter, avoiding a technical recession.
While eight of the ten economic sectors showed growth in the first quarter, BankservAfrica describes growth as subdued, consistent with BETI results.
“The economy remains in a muddling through scenario and is unable to meaningfully alleviate South Africa’s social and unemployment problems,” Kruger said.
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