The severe economic challenges that have hit South Africa over the past 18 months are now at their harshest, according to economists, as mounting issues converge to push households, businesses and industries down.<\/p>\n\n\n\n
Amid the volatile economic conditions that have pushed business and household confidence to lower levels, the BankservAfrica Economic Transactions Index (BETI) slipped again in August 2023.<\/p>\n\n\n\n
\u201cAfter rebounding in June 2023, the BETI fell in July and again in August to an index level of 134.0, which was lower than the revised 135.6 recorded in the prior month,\u201d said Shergeran Naidoo, BankservAfrica\u2019s Head of Stakeholder Engagements. <\/p>\n\n\n\n
\u201cOn the upside, the BETI remained in positive territory on an annual basis, improving by 1.9% in August 2023 compared to 1.1% reflected in July.\u201d<\/p>\n\n\n\n
The monthly BETI movements reflect the index\u2019s volatility and its inability to maintain momentum, akin to the \u2018muddle-along\u2019 narrative in the South African economy. <\/p>\n\n\n\n
The July disruption to major transport corridors, the taxi strike in August and the ever-present load shedding have put considerable pressure on the economy. <\/p>\n\n\n\n
These have been compounded by the depreciating rand exchange rate and rising international oil price that has resulted in fuel price hikes at the beginning of September, signalling renewed upward pressure on consumer inflation in the near term.<\/p>\n\n\n\n
\u201cConcurrently, interest rates have stayed at elevated levels with no near-term reprieve expected, leading to clear signs of stress among households,\u201d said Elize Kruger, Independent Economist. <\/p>\n\n\n\n
Real household expenditure in Q2 reflects the second negative quarterly growth rate in the past four quarters. It points to confidence levels that remain under pressure and, as a result, are keeping expenditure and growth back.<\/p>\n\n\n\n
The dire confidence levels are confirmed in the latest FNB\/BER Consumer Confidence Index report showing a reading of -16, signalling a low willingness to spend among consumers. <\/p>\n\n\n\n
The RMB\/BER Business Confidence Index regained some ground to a level of 33 in Q3, however, the report noted the business sentiment is still weak and that the large majority of respondents are dissatisfied with the prevailing business conditions.<\/p>\n\n\n\n
Nowcast indicators painted a mixed picture for August. The S&P Global South Africa Purchasing Managers\u2019 Index posted 51.0 \u2013 the highest in a year \u2013 up from 48.2 in July, showing a modest improvement in the private sector\u2019s operating conditions in August. <\/p>\n\n\n\n
The Absa Purchasing Managers\u2019 Index (PMI) also improved somewhat to 49.7 but remained below the neutral 50-level for the seventh consecutive month, signalling a strained manufacturing sector. <\/p>\n\n\n\n
The domestic new vehicle sales market faltered in August, with domestic sales down 3.5% compared to a year earlier.<\/p>\n\n\n\n
The standardised nominal value of transactions cleared through BankservAfrica in August 2023 was R1.207 trillion vs July\u2019s R1.210 trillion, while the number of transactions increased to 152.6 million in August, said Naidoo. <\/p>\n\n\n\n
As the economy gradually migrates to digital payments, the average value of transactions measured in the BETI will decline over time, as can be seen by the 5.9% decline to R8,084 in August 2023 compared to R8,591 in August 2022. <\/p>\n\n\n\n
The inclusion of the PayShap service\u2019s real-time, low-value transactions in the BETI will, over time, adjust the average value of transactions lower as more users start to adopt this nascent payment stream.<\/p>\n\n\n\n
There has been a steady growth in the use of PayShap, which recorded over 1.5 million transactions since its market inception in March, and as more banks offer this service.<\/p>\n\n\n\n
\u201cIt has become abundantly clear that the cumulative impact of many challenges that have been playing out in the economy during the past 18 months, is now at its harshest<\/strong>, at a time when confidence levels are still under severe pressure. <\/p>\n\n\n\n “The steep increase in interest rates, combined with the high cost of living, has resulted in growing strain on consumers in an environment of real and nominal declines in take-home pay,\u201d said Kruger. <\/p>\n\n\n\n \u201cWhile the BETI signalled the stronger than expected economic growth outcome in Q2, the lower BETI readings in July and August are already signalling a muted performance in Q3.\u201d<\/p>\n\n\n\n
\n\n\n\n