Economic activity improved for a second successive month in January, following a six-month declining streak that ended in November, signalling some tentative improvement in the broader economy over the past two months.
The BankservAfrica Economic Transactions Index (Beti) improved further in January 2023 to an index level of 132.7 from December’s 132.1.
BankservAfrica is an automated clearing house that acts as a transactional link between large payment institutions. While the January numbers are positive, they remain lower than in December.
The successive improvement in the Beti took place against a broader economic context that remained grim during January. The economy has suffered from high interest rates and inflation as well as the effects of the global economic slowdown.
The country has also experienced load-shedding at an average of stage 4 each day since the start of 2023, causing economists to dial down their GDP forecasts.
The Reserve Bank recently cut its growth forecast to only 0.3% for 2023 from 1.1% previously and notably below 2022’s estimated outcome of 2.3%.
Independent economist Elize Kruger said that with average population growth running closer to 1.3% per year, these growth rates imply that on a per capita basis, the average South African citizen will become poorer in 2023.
The January Beti was only 0.3% higher than a year earlier, and still notably lower than the record high reached in May 2022, which posted at 143.5. On a monthly basis, the Beti increased by 0.4% compared to a 1.4% increase in December.
The Beti is an early scorecard for the economy, specifically in terms of growth trends. It correlates with the Reserve Bank’s coincident indicator, as well as with GDP figures, while appearing a quarter earlier. The Beti represents the entirety of interbank payments in the country.
BankservAfrica data showed the value of transactions cleared in January was R1.04-trillion compared to R1.3-trillion in December, and the number of transactions subsided from a record high of 143.6-million in December to 135.7-million in January.
BankservAfrica’s head of stakeholder engagements, Shergeran Naidoo, said while the number of transactions declined on a monthly basis, compared to a year earlier, strong growth was recorded in the number of both debit transactions, which grew 16.6% on an annual basis as well as growth in credit transactions, which grew 19.0% year on year.
Naidoo said that reflected the strong growth trend evident in the volume of electronic payments, particularly in the DebiCheck and Real-Time Clearing payment streams.
BankservAfrica findings are similar to other indicators that surprised in January, posting positive numbers even as load-shedding intensified.
The Absa purchasing managers’ index (PMI) moved sideways at 53.0 in January 2023 from 53.1 in December. The PMI shows that even though the pace of vehicle sales growth moderated in January, it remains 4.8% higher compared to a year earlier.
Globally, the latest JP Morgan Global Composite PMI — compiled by S&P Global across over 40 economies and sponsored by JP Morgan — recorded a second successive monthly rise that has helped to allay concern about a worldwide recession.
At 49.8 in January 2023, up from 48.2 in December, the Global PMI signalled the smallest drop in output observed over the past six months.
The S&P Global South Africa PMI went against the trend, registering below the 50.0 mark for the first time in three months.
Kruger said while the improvement in the Beti for January is encouraging, there are stormy clouds gathering above the SA economy with many indications that we could expect “more of the same” in 2023, as the main challenges prevail.
“There is no indication that load shedding will abate anytime soon as recently awarded renewable energy projects are only expected to come on stream to alleviate the pressure at earliest in 2024,” Kruger said.
“Households are likely to remain under pressure due to elevated levels of inflation, interest rates and a tight labour market environment.”
She added that while SA should be close to the upper level of the current interest-rate cycle, rates will probably remain at the exit level for a prolonged period, even 12 months, before any declines could be expected.
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