The decline in economic transactions in February signaled the deterioration of South Africa’s economic activity as blackouts continued and interest rates and inflation remained at higher levels in addition to the global economic slowdown. The BankservAfrica Economic Transactions Index (BETI) fell in February 2023, after two consecutive months of encouraging growth. BETI reflects the standard value of all economic transactions in the South African economy in seasonally adjusted real constant prices. “At the index level of 131, the BETI for February fell to the level of October and decreased by 1.3% month-on-month, unlike the increase of 1.4% in December…
The decline in economic transactions in February signaled the deterioration of South Africa’s economic activity as blackouts continued and interest rates and inflation remained at higher levels in addition to the global economic slowdown.
The BankservAfrica Economic Transactions Index (BETI) fell in February 2023, after two consecutive months of encouraging growth. BETI represents the standard value of all economic transactions in the South African economy at seasonal real constant prices.
“At the index level of 131, the BETI for February fell to the level of October and declined 1.3% month-on-month, unlike the increase of 1.4% in December and 0.4% in January,” said Shergeran Naidoo, head of stakeholder engagement at BankservAfrica. . BETI February was 1.9% lower than February last year.
Also read: Another BETI decline in October points to local economic strain
Elize Kruger, an independent economist, said that this significant moderation in BETI reflects the pressure experienced by businesses in the country’s main economic sectors from the gloomy economic context.
“Stats SA data, which shows the economy contracted by 1.3% in the fourth quarter of 2022, reflects the impact and cost of the blackout. Retailers also show the predicted losses and costs of trying to operate as usual during severe blackouts. Ultimately, these cost increases will be passed on to final product prices, causing consumer inflation or resulting in lower margins.
Mixed performance in economic transactions
Other indicators recorded a mixed performance in February, with the Absa Purchasing Managers’ Index falling to 48.8 index points in February, while a sub-index measuring expected business conditions over six months fell to its lowest level since May 2020.
However, the S&P Global South Africa Purchasing Managers Index signaled that economic activity in the private sector stabilized in February, after five consecutive months of contraction as companies reported a slight recovery in purchasing levels, although input cost inflation accelerated to a seven-month high. upper.
The pace of vehicle sales growth moderated in February, but remained 2.8% higher than a year ago. The decline in global manufacturing is showing signs of easing in early 2023, according to the latest JPMorgan Global Manufacturing PMI™, but the rate of contraction in output and new orders is slowing, with only employment increasing.
BankservAfrica data also showed mixed economic activity in February.
“Standard nominal transaction value was R1.17 trillion in February compared to R1.04 trillion in January, but transaction volume fell to 133 million during the month compared to 135.7 million tracked in January,” Naidoo said. .
“The recent moderation in economic transactions, after only two months of marginal improvement, confirms that the economic environment remains challenging and the economy remains in the ‘muddle-along-cittle-thriving’ narrative.”
Kruger said that while the government has recently announced what it will do in the energy and transport sectors, it cannot be done in the short term.