The biggest drop in transaction volumes in more than a decade could be an indication that winter has also arrived for the economy, according to an economist.<\/p>\n
Latest figures released by BankservAfrica Economic Transaction Index (BETI) show a depressed economy but the year-on-year number is still positive, growing by 1.6% in May.<\/p>\n
Load shedding has clearly had a disruptive effect, with the almost daily occurrence of power cuts in April and May putting a damper on electronic transactions.<\/p>\n
The impact of disruptive electricity supplies and slower world economic growth is distinctly reflected in the numbers, which show the sharpest decline on a quarterly basis since October 2014, and the biggest monthly drop since August 2014.<\/p>\n
\u201cWith consumer inflation likely to move higher, large increases in the BETI will be unlikely \u2013 but it does seem that load shedding is playing a much bigger role at present. If load shedding can be kept to a minimum it is likely that the BETI will at least continue to rise marginally,\u201d said Mike Schussler, chief economist at Economists dotcoza.<\/p>\n
\u201cWith both consumer and business confidence down, the decline in economic transactions, as represented by the BETI, indicates the economy is under duress rather than expanding. Perhaps winter has also arrived for the economy,\u201d said Schussler.<\/p>\n
\u201cAt present the actual monthly decline of 1% is worrisome as it is rather sharp and sudden.<\/p>\n
“One can only hope that most of the load shedding is now something of the past, or at the very least that the frequency is not going to be repeated, as it is clear that load shedding has a dire impact on economic transactions,\u201d said Dr Caroline Belrose, head of fraud and data analytics at BankservAfrica.<\/p>\n
The 5.9% drop in transaction volumes is the biggest in more than a decade, and the first time that \u2013 for two months in a row \u2013 the actual number of transactions declined while the average values increased to greater than inflation. This is probably indicative of businesses combining transactions and ensuring that these are completed during periods of stable electricity supply.<\/p>\n
\u201cThe quarter-on-quarter decline of 0.6% is less severe than the monthly decline; however, the strong April numbers serve to highlight how weak the South African economy was in March and May this year,\u201d said Belrose.<\/p>\n
Another interesting aspect from this month\u2019s BETI is that it appears that many consumers are no longer signing debit orders, as the household debt-to-income ratio continues to decline.<\/p>\n
Fin24<\/a><\/strong><\/p>\n Negative outlook for SA economy<\/a><\/strong><\/p>\nMore on SA economy<\/h3>\n