South Africa’s economy slows to a crawl

BankservAfrica’s Economic Transaction Index (BETI) shows that annual growth slowed to only 0.2% last month, the electronic payments transaction company said on Wednesday.

BankservAfrica’s regulated products CEO Brad Gillis said not even the pre-election spending of political parties could put momentum back into the economy.

“The 0.2% year-on-year growth in April 2014 shows one of the smallest changes in economic activity over the last year,” he said.

“On top of that, five of the last eight months indicated a month-on-month decline and only three, including April, showed an increase.”

Chief economist for economists.co.za Mike Schussler said political parties only spent on a massive scale once every five years and some of this spend could show in the April figures.

He said May or June could show more subdued economic activity due to the backlash of extended strikes.

“In the past, the effect of a strike was mostly felt a month or two after the strike ended. On top of this, the economy is running the risk of negative growth as a result of high consumer debt levels and the inability of the economy to create new jobs.”

Schussler said businesses struggled with the pace of economic change.

On an international front, the South African economy would feel the effects of the recent lowering of growth figures for most countries by the Organisation for Economic Co-operation and Development.

“It seems the whole economy is caught between strikes and slow international growth,” he said.

Gillis said although the BETI took public holidays into consideration, they alone could not be used as an explanation because businesses no longer closed shop on these days.

Also on Wednesday, the SA Chamber of Commerce and Industry (Sacci) reported that its business confidence index (BCI) declined  by 0.1 index point in April.

The BCI for April stood at 92.6 from 92.7 in March, it said in a statement.

The April figure was 0.3 index points higher than its April 2013 level.

Sacci found there were no signs that the general election affected the business psyche negatively.

“However, the policy positions to be embraced will no doubt have an impact on business confidence,” it said.

“Improvements in the BCI will reflect the domestic economy’s response to business-friendly policies by the newly-elected government, global market trends in relation to South Africa and the economic performance of advanced economies.”

The chamber said prompt action by the new administation was required if permanent fault lines in the economy were to be averted.

Meanwhile, the public holidays in April did not affect the business mood negatively, it said.

“Five of the 13 sub-indices of the Sacci BCI had negative month-on-month impacts in April 2014.”

Four of the seven physical economic activity sub-indices were negative on a month-on-month basis in April, two were positive, while one index was unchanged.

“On an annual basis, seven of the BCI sub-indices were in negative territory in April 2014, a similar number to that of March 2014,” it said.

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South Africa’s economy slows to a crawl