Author: Mike Schussler Source: Bankserv Africa
January BETI shows a hopeful yet vulnerable economy
South Africa’s economic growth is not strong enough to withstand any further damaging events without serious consequences, according to the latest BankservAfrica Economic Transaction Index (BETI).
“The economic ship has emerged from the storms of 2012 battered and bruised, although a slight upturn in data for the last three months shows that there is hope,” says Brad Gillis, CEO for regulated products at BankservAfrica.
Despite this glimmer of hope, the shadow of last year’s strikes has fallen over any prospects of 2013 being the year of an economic bounce-back according to Mike Schüssler, chief economist at economists.co.za. “Early indications are that we are in for a year of slow reparations to our ship.”
According to Schüssler, amongst the threats to the economy are further massive strikes or a downward shift in commodity prices.
“On the brighter side, the five-month trend of quarterly declines has been broken. The last three months of positive quarterly increases point to a slight pick-up in economic activity over the short term. This is at least an indication that a recession is not on the cards at present.”
“Also, the underlying economic weakness means that an increase in interest rates is highly unlikely,” Schüssler explains.
Stagnating trend continues
Stagnation in the economy is continuing, as the BETI indicates that economic activity at the start of 2013 is a lot slower than it was at the start of 2012. The slow start is likely to have a big impact on the rest of the year’s GDP growth rate.
“A slow start means that the rest of the year has to produce so much more to catch up for lost production in the beginning. The few positive blips on the radar include a year-on-year pick-up of 12% in motor vehicle sales – partly thanks to hail damage, amongst others,” says Schüssler.
“I am hesitant to make predictions based on one month’s data. However, the reality is that the trend will have to change dramatically if 2013 is going to be any better than 2012.”
The BETI is currently only up by 1% relative to January 2012, making it the lowest year-on-year improvement since June 2010 when the economy was recovering from the recession of 2008/09.
Schüssler advises living costs are climbing, while the average consumer is unable to push up their income. “Workers feeling the pinch are demanding more cash, while the economy is making increased economic activity difficult. We are, indeed, in a very tight spot.”
The January quarter-on-quarter growth figure of 1.6% indicates a slight pick-up in the growth trend. This is, however, not enough to halt the declining year-on-year trend.
The BETI is currently indicating that GDP growth will still be positive, but low.
Contact Gerian Miller for more information: GerianM@bankservafrica.com or (011) 497 4067
Notes to the editor:
The BETI – an early fact-based economic indicator The BETI remains the broadest and fastest indicator of broad economic activity in South Africa and can be considered part of the innovative set of economic indicators falling under the new economic term of “now-casting Of all the South African “now-casting” and broad sector indicators, the BETI has the shortest time lag. It also does not simply provide a one-sector view. The BETI appears monthly and has a less than 14-day time gap between actual events and release. Most real economic indicators have a gap of anything between 38 and 75 days.
While some understanding of the BETI and its short-term meaning proves necessary, BankservAfrica and economists.co.za believe that it is the best indicator of overall South African GDP trends.
Faster near-term data is important in spotting trend changes in the economy. The BETI fulfills this need by being probably the broadest and fastest trend ‘dipstick’ that the South African economy has at present.