South Africans rushed to the stores to purchase their goods ahead of the 21-day lockdown, but spending has since dropped dramatically as people follow the government’s measures to curb the spread of the coronavirus and stay at home.
This is according to new data from BankservAfrica which shows that the volumes of ATM and point-of-sale (POS) transactions declined dramatically at the end of the first three days of the 21-day national lockdown.
But this came after the large spike caused by the shopping rush in the days following President Cyril Rampahosa’s announcement on Monday, 23 March 2020, said Shergeran Naidoo, head of Stakeholder Engagements at BankservAfrica.
“Our data, which reflects the volumes of transactions processed by BankservAfrica since the beginning of last week, suggests South Africans are complying with the request to stay at home as the average daily transaction volumes for the three days to Sunday, 29 March 2020 were far lower than the previous year,” he said.
How South Africans spent before and after the lockdown announcement
“Bearing in mind that this is month-end, one would have expected higher than normal transaction volumes. But our comparative data to the same three-day period in March 2019 revealed volumes were only 31.6% of the normal,” said Naidoo.
On Sunday, 29 March 2020, the transaction volumes were just 28% of the normal for the same day last year.
“It seems economic activity came to a standstill all over South Africa,” said Mike Schüssler, Chief Economist at economists.co.za.
In the two days before the lockdown, South Africans used their month-end salaries to rush to the stores.
“The normal volume of transactions from Tuesday (24 March 2020), a day after the President’s national lockdown announcement to Thursday (26 March 2020) reached an incredible 148% of volumes processed at POS terminals and ATMs as the country population prepared for the 21-day period. South Africans knew they had to fill their cupboards and fridges,” said Naidoo.
On Sunday, only 1.2 million transactions were recorded compared to an average of 5.4 million on a more typical day after month-end.
“By Sunday, 29 March, the number of transactions was only about 60% of what we would normally see on major holiday spending days like Christmas and Easter. It is unlikely that we will see the volume of transactions at this low level again,” said Naidoo.
What this could mean for our economy
“The drop in transactions suggests that about 70% of the consumer-facing economy has fallen away and that will certainly mean a plummeting GDP level,” said Schüssler.
Although it is difficult to provide a forecast, one could say that as consumers make up about 60% of expenditure, a one-month lockdown could see GDP fall. On an annualised basis, this will be spread over the first two quarters of the year. Most of this decline will be evident in the second quarter.
“While the third and fourth quarters could see growth again, the catch-up will not be as great. A GDP decline could be on the cards,” said Schüssler.