by Jonathan Mahapa

BETI update

BETI reveals economic recovery marred by school and Easter holiday

The recent public holidays prevented economic growth in SA
slow business.jpg

The February BETI showed very encouraging signs of an economy clawing back after more than a year of stagnation. However, extra holidays, lower export prices and work stoppages in March put the brakes on this recovery momentum. This is according to Brad Gillis, CEO for regulated products at BankservAfrica.

 A hesitant recovery

“Overall, the BETI data reflects an economy with hesitant growth. Perhaps the recovery is not as strong as we would have liked it to be, but the facts do suggest that a recovery is still present,” Gillis explains.

Chief economist for economists.co.za, Mike Schüssler agrees and explains the continuation of wildcat strikes at the post office in Gauteng and some other work stoppages at Medupi, potentially still have an impact on overall business sentiment and are also delaying stronger improvements in the economy.

“Commodity price declines towards the latter half of March also made it difficult to confirm the positive trend over the last few months,” Schüssler explains. 

Easter crept into March this year, while it fell in April in 2012. The earlier start to the Easter holidays resulted in declining cars sales as well as fewer full productive working days, since many people went on holiday between 21 March (the long weekend) and the start of the Easter weekend.

“Particularly disappointing was the BETI quarterly growth which had picked up speed for four months in a row before the March 2013 holiday shift. On this evidence one has to say that we still need another two months of stronger growth to confirm a stronger GDP growth trend from the BETI,” says Schüssler.

South Africans probably took an extra day or two off in March, and a stronger showing in the BETI and GDP can be expected in the second quarter.

According to Schüssler this may then confirm the more positive finding of February of this year and December 2012 of the BETI.  “At this stage, however, the jury is still out on the confirmation of the South African economic recovery – even though we remain positive that it is still likely to happen.”

“The stagnation of the BETI on face value seems to have returned, but keep in mind that school holidays started ten days earlier than it did in 2012. The fact remains that although the quarter-on-quarter change was slower in March, it has now increased for six months in a row.”

A turning point

Schüssler explains the South African economic cycle is still at a turning point.

“No strong positive confirmation of last month’s strong showing has been obtained, indicating a hesitation in the economic recovery.”

“On an index point basis it is, nonetheless, still the second highest BETI number since April 2012 and the third highest overall,” says Schüssler, “showing that a decline in economic growth for the first quarter is very unlikely. Slow growth – perhaps around 2% to 2.5% – is what the BETI is predicting.”


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