Numbers from the latest BankservAfrica Economic Transaction Index (BETI) show that South Africa’s economy is stagnating, according to economist, Mike Schüssler.
The BETI is a broad overview of current economic trends over a broad range of sectors, making use of economic transactions as captured by BankservAfrica.
The latest value of the BETI stood at R654.3 billion which, in nominal terms, was up 6.6% on last year.
According to Brad Gillis, CEO of regulated products at BankservAfrica, the quarter-on-quarter growth in the BETI is the same as the year-on-year growth at 0.8%, while the month-on-month increase is only 0.1%.
“This is the highest number obtained this year, but on balance it is mainly the result of higher inflation rather than actual growth,” Gillis said.
“The actual number of transactions in the BETI (83.1 million) is the highest since Christmas 2013. Although this was up by exactly 5% on last year, it shows that the value of consumers’ transactions increased with less than inflation over the last year.”
“South Africans were probably forced to cut back on some expenditure,” Gillis said.
According to chief economist at economists.co.za, Mike Schüssler, the numbers from the BETI are an indication of a stagnating economy.
The South African economy appears to be “falling asleep at the wheel”, Schüssler said, adding that, broadly speaking, the economy has been in a slow growth or stagnating mode for about 18 months and is, at best, continuing along this path.
Factors impacting this trend include the “most damaging strike action in 20 years” – as well as consumer and producer prices rising faster than anticipated.
“Along with slightly higher interest rates, this is curbing consumers’ enthusiasm to spend.”
According to Schüssler, one hopeful sign is that the economy is still growing despite the challenges.
“Nevertheless, the economy is inching forward and the number of economic transactions is, on the whole, an indication that the South African economy is still fighting against any possibility of a recession.”
“Many are apprehensive that if current labour market outcomes remain divisive, one would have to pencil in further weaknesses in the actual BETI going forward.”