Strikes, power outages and other economic constraints have not been able to steal the last bit of life from South Africa's economy, providing a window of opportunity to stimulate sustainable growth.
This is according to the latest BankservAfrica Economic Transaction Index (BETI.)
“Monthly growth in February has been a positive blip on a very negative year-on-year radar screen,” says Brad Gillis, CEO regulated products at BankservAfrica.
According to Gillis, the year-on-year data remains flat despite very strong monthly growth in February.
“The monthly smoothed BETI had its strongest month-on-month growth since February last year; however, the actual year on year change in February 2013 remains 1.2%. The year-on-year increase in the BETI has remained below 1.5% for six months in a row. Therefore, the strong month-on-month growth of 1.1% is certainly not a trend. Nonetheless, there is evidence that the South African economy is avoiding a recession, as the quarterly growth is the strongest since April 2013,” Gillis explains.”
An economy wanting to bounce back
The host of negative events means that a much weaker BETI would not have been a surprise at all. However, it seems as though February – despite the major strike in the platinum industry – regained a lot of momentum as the economic value of transactions showed significant monthly growth.
“This may relate to suppliers re-stocking after the Christmas season, and, as usual, the effect of the strike action will only show up a little later in the BETI,” says Mike Schüssler, chief economist at economists.co.za.
The BETI confirms that low confidence and constraints in the economy are still taking its toll on actual economic activity.
"With new cars sales declining at a slower rate than in January and the broad-based PMI in February also recovering from January (remaining in low but positive territory nonetheless), the BETI affirms that the economy wants to recover but simply has too much stacked against it," says Schüssler.
However, with the large platinum strike (on top of strikes in some municipalities, the post office and smaller strikes in other industries) the likelihood of a full-blast recovery remains distant. With the nine days of coal export losses in February and power emergencies, one could have expected a much weaker BETI.
"At least the economy seems to have some staying power and it is very likely that, once some of the constraints are lifted, growth could recover far quicker than currently expected,” Schüssler continues.
The BETI values in brief
The actual value of all the transactions in February was R649.4bn, which (in current terms) was 7.4% higher than a year ago. This is estimated to be about 25% to 30% of the total value of economic transactions in the South African economy.
The number of transactions in February was 79.m, growing by 3.4% on a year ago. For a short month like February, this is quite high.
The average value per transaction in the BETI was R8,123, which was 3.9% higher than a year ago (in nominal terms). This is, however, less than the rate of inflation.