BETI indicates SA economy still in decline
Danger that a third quarter dip could spell technical recession
The most recent BankservAfrica Economic Transaction Index (BETI) indicates that economic activity over the short term is in retreat, despite still being positive when compared to a year ago.
This latest quarter was the weakest quarter-on-quarter change since November 2013 and shows how deep the decline in the South African economy is, according to economic transactions as measured by BankservAfrica.
There was a 3% year-on-year decline in the number of transactions reflected by the BETI, making this the second consecutive month of decline in the number of transactions.
“The BETI indicates that monthly changes are declining at the fastest rate. Three consecutive monthly declines are unusual when an economy is not in decline – this has happened only once in the last four years,” Mike Schüssler, Chief Economist at Economists dotcoza.
“Should there be a third quarter measuring a decline, this would put the South African economy into a technical recession. It is highly likely that most people have begun experiencing the effects of the current continuous decline in the economy already.
” The South Africa economy is being hit hard by lower commodity prices, low consumer confidence as measured by FNB, and business confidence as measured by RMB. The Standard Bank PMI is also negative, as is the SARB lead indicator.
“The BETI is a good co-incident indicator which confirms the overall decline in the domestic economy. When five of the last nine months have indicated monthly declines with four quarter-on-quarter declines as well, the BETI is certainly not indicating a strong economy. This is in spite of the fact that, due to strike action in 2014, we are comparing current figures to a low base, making the annual changes seem artificially high,” says Dr Caroline Belrose, Head of Fraud and Data Analytics at BankservAfrica.
The evidence suggests that there is unlikely to be a quick turnaround of the situation.
Forecasts from official sources such as the IMF and the South African Reserve Bank indicate much slower growth for 2015 and 2016. These predictions are backed up by the BETI, which predicts that the growth forecast may decline further.
Wendy Fourie for more information: firstname.lastname@example.org or (011) 497 4119.
Notes to the Editor:
The BETI stands for the BankservAfrica Economic Transaction Index. BankservAfrica is a payment enabling organisation operating between the various South African banks with a very secure messaging environment in place. Economists dotcoza is an economic consultancy that helped develop the BETI.
The BETI is a very fast and broad overview of current economic trends over a broad range of sectors, making use of economic transactions as captured by BankservAfrica. Like the Swift Index, the BETI is considered a “now-cast” number as a result of its speedy ability to convey the overall economic conditions to the market. Where most economic indicators can take anything between 38 and 76 days to become public knowledge, now-cast indicators take less than a month after the facts were revealed to come to the market.
The BETI is also the broadest of the “now-cast” indicators to come to the market, as it covers economic transactions across the whole economy. Very big distortive economic transactions do not form part of the BETI. This is also on its own a trend-strengthening indicative factor. BankservAfrica is a payment enabling organisation which sits between the various South African banks. The organisation has a very secure messaging environment in place. Economists dotcoza is an economic consultancy that helped develop the BETI.