BankservAfrica BETI – June 2020

BankServAfrica BETI - June 2020

 

 

 

 

Press release: For immediate release

Date: 15 July 2020

 

BETI shows strongest bounce back since COVID-19 lockdown

The BankservAfrica Economic Transaction Index (BETI) for June 2020 showed the biggest one-month bounce back on record, providing the first strongest indication of an economic recovery since the start of the COVID-19 lockdown. However, there is still a long road ahead for the South African economy.

“The BETI was 101.7 in June, which represents a strong change from the weakest point of 98.1 in May. There has also been an improvement for the real price increase in the value of transactions, which moved from -4.3% in May to 3.7% in June. The upward changes in June, even after a seasonal adjustment, are positive for the South African economy,” says Shergeran Naidoo, Head of Stakeholder Engagement: BankservAfrica.

But he cautions against viewing these figures in isolation to the transaction movements in previous months. “This data remains volatile under the current circumstances. The headline BETI for June remained in negative territory at -17.1 lower on a year-on-year basis. On a quarter-on-quarter basis, the BETI was -14.6%. These reflect the depth of the overall economy’s decline since 2020,” says Naidoo.

This is also an early indication that South Africa’s GDP in the second quarter of 2020 could reveal a very large contraction. The BankservAfrica Economic Transaction Index (BETI) is the broadest actual economic reading and a proven leading indicator of South Africa’s GDP, with a close alignment to the SARB’s Co-Incident indicator. As such, it is one of the very few monthly indicators in South Africa that gives insights into the economy two weeks after 30 days of transactions having been processed by BankservAfrica. The BETI indicated that the fourth quarter of 2019 and the first quarter of 2020 were to show declines – and this duly transpired in the published GDP data.

Meanwhile, the number of transactions in June were 6.5% higher than a year ago but about 5% lower than the average. The average value of transactions declined by -10.7% in nominal terms – the first time double digit decline over three consecutive months on the BETI’s records. This suggests less spending on big ticket items such as property.

“While the economy will take time to recover, the latest data from June suggests a recovery from the COVID-19 crisis is underway and that the stimulus from government sector via the UIF COVID-19 Temporary Employee Relief Scheme (TERS) pay-outs, extra social grant spending and tax relief, as well as the banking sector’s payment holidays and a host of other measures, have helped to stabilise the economy,” explains Mike Schüssler, Chief Economist at economists.co.za.

But there is a long and winding road ahead as large parts of the economy will still need to absorb the lagging shocks from the lockdown period – and face those still to come. “Like other countries, there may be further regional lockdowns or outbreaks which can impact future numbers. We also need to remember that South Africa’s economy was already frail before COVID-19, therefore a comeback will not be a straight path. There will also be challenges such as the return of power outages,” says Schüssler.  “But for now, it appears the recovery from the COVID-19 lockdown has started with data faring better than May, and April and on par with March’s. More organisations and individuals are partaking in economic activity again.”

This appears to be the first step towards a V-shaped recovery for the South African economy. “The third quarter of 2020 is going to need to have a swift start off the low base in the second quarter and its strong ending. This will put the economy in a better place than where it was three months ago,” ends Schüssler.

Ends

Contact Leigh-Anne Sa Joe for more information: Leigh-AnneS@Bankservafrica.com or (011) 497 4347.

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.co.za 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.

About BankservAfrica

BankservAfrica is the trusted payments partner and Financial Markets Infrastructure (FMI) to the financial services industry. As the largest automated payments clearing house in Africa we clear and process billions of low value card, ATM and EFT transactions annually. Our role in the South African National Payments System (NPS) is to facilitate interoperability between the banks and ensure regulatory compliance with our regulators against international banking security best practice and standards and reduces risk and complexity in the industry.

We continue to strive to be a world class and pre-eminent payments operator, innovator and payments partner of choice in Africa, by simplifying our worlds through combining trusted transactions with sensitive information.

BankservAfrica’s national responsibility is to provide safe financial payment services for 56.7 million South Africans, irrespective of their location in partnership with our shareholders and partners.

With a 48-year history in South Africa, BankservAfrica operates 24/7, 365 days a year and delivers on very strong SLAs.

 

 

BankServAfrica BETI - June 2020

 

 

 

 

June 2020 BETI report to accompany press release

Date: 15 July 2020

BETI shows biggest monthly increase on record

But there is a long and winding road ahead to economic recovery

The strongest one-month bounce in the BETI occurred in June 2020, which stood at 101.7 from the weakest point of 98.1 in May. This indicates the South African economy is starting up again and supported by data on the real price increase in the value of transactions, which was 3.7% in June, compared to the -4.3% in the previous month. This sizeable increase occurred after the BETI data smoothing and represents the strongest monthly figure on record since 2002. In raw seasonally adjusted terms, the increase is even stronger but, as the data is volatile in nature under the current circumstances, this is not the only change one should look at.

The headline BETI for June was -17.1% lower on a year-on-year basis, reflecting the depth of the overall economy’s decline since March 2020.

On a quarter-on-quarter basis, the BETI was -14.6%. This is an early indication that South Africa’s GDP in the second quarter of 2020 could record a very large contraction, which is the consensus of many economic observers.

The BankservAfrica Economic Transaction Index (BETI) is the broadest actual economic reading and a proven leading indicator of South Africa’s GDP, with a close alignment to the SARB’s Co-Incident indicator. As such, it is one of the very few monthly indicators in South Africa that gives insights into the economy two weeks after 30 days of transactions having been processed by BankservAfrica. The BETI indicated that the fourth quarter of 2019 and the first quarter of 2020 were to show declines – and this duly transpired in the published GDP data.

While the economy will take time to recover, the latest data suggests recovery from the COVID-19 crisis is underway and that the stimulus from government sector via the UIF COVID-19 Temporary Employee Relief Scheme (TERS) pay-outs, extra social grant spending and tax relief, as well as the banking sector’s payment holidays and a host of other measures, have helped to stabilise the economy.

But there is a long and winding road ahead as large parts of the economy will still need to absorb the lagging shocks from the lockdown period – and face those still to come. The recovery will not be a straight path and the closer the economy gets to its normal levels, the harder it will become to record big recoveries. As is the case in other countries, there may be further regional lockdowns or outbreaks which can impact future numbers. Also, with South Africa’s economy already being in a weak position before COVID-19, we need to be aware that the comeback will not be a straight line. This will also be challenged by old problems, such as the electrical power, coming to the fore. For now, it appears the recovery from COVID-19 lockdown has started with data faring better than May, April and March. More organisations and individuals are partaking in economic activity again.

This appears to be the first step towards a V-shaped recovery for the South African economy that features months of sharp declines leading to a quick recovery. The other observation is that the third quarter of 2020 is going to have a fast start off the low base in the second quarter and its strong ending. That will put the economy in a better place than three months ago.

Double digit drop for average value per transaction

The number of transactions in June were 6.5% higher than a year ago but about 5% lower than the average. This is due to the low base in June 2019 that reflected poor performance. The average value of transactions declined by 10.7% in nominal terms. Our BETI records show this is the first double digit decline in three consecutive months and indicates economic role players are staying away from big-ticket item purchases like property.

Graph 1: The BETI and Co-incident Indicator % change on a year-on-year basis

Graph 1 BETI - June 2020

Source: BankservAfrica and Economists.co.za

 

 

Graph 2: The South African GDP and BETI % change on a quarter-on-quarter basis

Source: BankservAfrica and Economists.co.za

 

 

Table 1: The BankservAfrica Economic Transaction Index

Source: BankservAfrica and Economists.co.za

 

Table 2: The volume and average value of transactions and the Standardised BETI in nominal terms

Source: BankservAfrica and Economists.co.za

 

 

 

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