Glimmer of hope for SA economic growth


Cape Town - The April 2016 BankservAfrica Economic Transaction Index (Beti) seems to indicate a stronger economy, particularly after an extremely weak January, according to Mike Schüssler, chief economist at Economists dotcoza.

He emphasised, however, that the numbers in the upcoming months will be critical in confirming or disproving this trend. The number of transactions counted for use in the latest Beti was 87.8 million for the month. The standardised nominal value increased 8% on a year ago to R766bn.

The lack of Easter holidays last month has helped the April 2016 Beti to maintain its growth momentum from March.

In 2016 the Easter public holidays fell in March, making April a stronger month with a reduced number of public holidays - from four to three - which has a momentum effect for the quarter. This shift in holidays and the leap year have, therefore, had a positive effect on the economy, Schüssler explained.

"I don't think the economy necessarily out of trouble," Schüssler told Fin24 on Wednesday. "It is rather more like the lighter of a cigarette that the cold winds of a recession will hopefully not blow out."

READ: Modest growth still supporting SA economy - index

In his view, confidence in the SA economy is a very important aspect. At the same time the huge unemployment numbers are worrisome. Factors like an uptick for a while in commodity prices and signs of more strength in the rand could have kept the flame of the SA economy alive, giving people a bit of hope.

"The latest Beti data surprised me on the upside and it has a good potential. I would just like to see how it unfolds over the next few months, though. We should be holding our breath in SA, but at least the latest data is not as negative as it could have been," said Schüssler.

"If the SA economy takes another step back in May or June, I would be more worried, but for now, I would say it could just be a bit of sunshine coming through the dark clouds for the SA economy."

The Beti measures all South African interbank transactions under R5m, therefore, giving a broad picture of the current South African economy. Month-on-month change remained level at 0.8% and the latest Beti showed its third consecutive month of marginal positive growth - a scenario that has not played out since mid-2013.

“The quarter-on-quarter increase is the strongest since February 2012 at 3.9%, while the year–on-year increase remains the same as March at 1.2%, better than any month since last November,” explained Dr Caroline Belrose, head of knowledge and risk services at BankservAfrica explains.

In her view, the quarterly improvement can be partially attributed to the fact that seasonal adjustments cannot take holiday shifts into account, coupled with the fact that both quarters had an extra day in them as February 2012 and February 2016 were leap year months. Adding one extra day equates to at least 1.1%.

Further indicators for Belrose that April was a better month for the economy are the higher PMI (Purchasing Managers' Index) numbers from Barclays Bank, and a reduced decline in new car sales. New car sales showed a decline of 9% compared to the 14% in March year-on-year.

ALSO READ: Better February no game-changer for SA economy - index

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