Johannesburg - Modest growth is still supporting the South African economy, with some decline seen in occasional months, according to the March 2016 BankservAfrica Economic Transaction Index (Beti).
The actual underlying trend is for growth of less than 1% in the first quarter of 2016 despite the extra leap year day in February. The drought and the lower commodity prices are affecting the economy, although the impact is likely to deepen as many of these effects have yet to reflect on growth.
The Beti measures South African interbank payment system transactions smaller than R5m, giving a broad indication of the current SA economy.
BankservAfrica cautioned on Wednesday that, while the SA economy is likely to show modest growth given the weak January figures and the earlier-than-usual Easter holidays, a decline in gross domestic product (GDP) cannot be ruled out in the first quarter of 2016. The two-year trend of weak growth and stagnation continues, and economic growth forecasts are very likely to decline further.
Mike Schüssler, chief economist at Economists dotcoza, said the data for March this year is affected by the three public holidays that fell during the month, compounded by an early Easter.
“Taking these holidays into account, we expected the March data to be a little stronger, while the opposite effect should be visible in April,” said Schüssler.
“Essentially, this is typical stagnation, as economic growth remains weaker than population growth, meaning the average person is getting poorer.”
The latest Beti showed a slight improvement on March 2015, but was significantly more modest than the February numbers. In February the month-on-month change was a very strong 2.2%.
“The March monthly change is a mere 0.4%, while the year-on-year change jumped up to 0.8%. This is because weak data from March last year inflates the calculation of the annual change,” explained Dr Caroline Belrose, head of knowledge and risk services at BankservAfrica.
When compared to March last year, the number of transactions grew by 3.7%, but the average value of the transactions declined by 1.1% to R8 451, according to Belrose. The total actual transaction value was up 2.5% in nominal terms.
The Beti for February showed it was a good month for the SA economy, but at the time Schüssler said it is likely to be an exception in an expected overall downward trend. He cautioned at the time that February had 29 days this year as well as an extra week day. That could have led to the month being a bit stronger than usual.
In his view at that time, the overall trend for SA is still down, but not in a straight line.