January 'dismal' as SA's lengthy slump continues - report

There are indications that the downswing phase in the SA business cycle has entered its 61st month in January - making it nine months longer than the previous slump.

This is according to according to the latest BankservAfrica Economic Transaction Index (BETI), released on Thursday. 

January was also described as dismal for the SA economy.

Since the BETI covers payment transactions in almost all key economic sectors, from construction to wholesale, it reflects gross domestic product (GDP) and domestic expenditure in a broad sense.

According to the BETI report, the SA economy is very firmly caught in a low-growth environment and drastic measures will have to be taken soon to help the economy get to a higher growth rate.

Little improvement in 5 years

"What is also becoming clearer is that the domestic economy has not improved much in real terms in five years.

In January 2014, the index was 124.7, which means real-term transactional growth was just over 2.4% in the five-year period leading to January 2019's reading of 127.7," states the report.

The BETI for January 2019 points to evidence of another slowdown in the SA economy, reflecting weakened values and volumes.

The BETI report describes January 2019 as having been a dismal month. The previous months combined show a slowing trend over a period of four months.

Other economic indicators of domestic spending, such as vehicle sales and the manufacturing Purchasing Managers Index (PMI), also showed declines.

In January, the BETI declined across all measurement periods for the fourth time in the last 24 months to a reading of 127.7 points. The year-on-year change was 1.2% with a quarterly decline of 0.4%.

November's uptick temporary

The report says the growth trend began slowing down in December 2018 by a 0.1% drop from November. This was after November represented a slightly positive month on the back of Black Friday and Cyber Monday sales.

"January's slowdown seems to come partly from electronic debit transactions. These, estimated to be around 4.5% of the total economy, increased by only 1.5% before inflation. This indicates a real decline of around 3% on 2018's figures," states the report.

"Electronic credit transactions declined by around 2%. Real-time interbank transactions are, however, in a very strong growth phase. When compared against these, it is evident that cheque payments continued declining over the last decade and is now the smallest payment method – other than authenticated early debit orders."

The latest BETI also shows that the overall trend of transaction values declining in real terms, continues.

BETI

(Source: BankservAfrica and economistsdotcoza)

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