Good news from BETI

BankservAfrica Economic Transaction Index comes close to confirming economic upturn

The latest BETI indicates that SA's economy is bouncing back
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The economy is breaking free from more than a year of stagnation and industrial action, now showing growth in all three comparison periods – yearly, quarterly and monthly.

Brad Gillis, CEO for regulated products at BankservAfrica, says only another month of positive figures is necessary to confirm the upturn and that the economy is actually showing stronger-than-expected recovery across a range of sectors.

“We believe that if the BETI stays strong and shows continued growth, it will confirm that the economy is back to a more normal growth rate of closer to 3%. We do not necessarily expect the BETI to continue showing numbers as strong as those we saw in April, and consumers should, therefore, not get too carried away and start spending again.”

This is reiterated by chief economist at Mike Schüssler, who adds the gold price is still weaker, and other commodity prices could still upset the apple cart.

“The fact remains that we were caught off guard by the strength of the April figures. On a quarterly basis (compared to the quarter ending in January 2013) the BETI grew by 5% - this being the strongest since April 2007!” exclaims Schüssler.

The BETI increased by 3% on a year-on-year basis – the best showing in a year. The improvement on a monthly basis is the best since March 2007, as the BETI climbed 2.5% for the month of April alone. According to Schüssler, this is certainly a good indicator of a healthier economy.

“Furthermore, the actual index hit its highest level ever and shows that the broad South African economy is now back into a normal growth period after the industrial unrest of the last year,” he explains.

“All this simply means that we only need another month with similar figures to be able to agree that we have finally buried the long season of stagnating growth. Even when accounting for extra holidays, the BETI certainly makes for more upside surprises than downward ones.

“South Africa is heading back to a more normal growth path.”

Contributing factors to the upturn

Schüssler says the strong showing of the BETI was expected since it was known that the number of working days would be more in April than in March, and that school holidays started earlier this year due to an earlier Easter weekend. April 2012 had 18 working days while April 2013 had 21 working days – a 16.7% improvement.

The BETI, furthermore, indicates that the chances must now be over 75% that the South African economy has been growing stronger for the last seven months on a quarter-on-quarter basis. Taken together with stronger exports in recent months, double-digit growth in new car sales in April have certainly added to the better-than-normal outlook.

The higher-than-expected March retail figures show some more of this unexpected upturn of the South African business cycle. Exports, too, are now starting to react to the weaker rand (despite lower commodity prices), while imports are increasingly capital in nature again.

“Lesser industrial action in April also means increased economic transactions,” says Schüssler.

“However, although a slightly stronger PMI indicates that new sales are booming, employment has yet to benefit in manufacturing. The April BETI, nevertheless, does underline better business conditions in the South African economy. The very strong BETI can be the start of the kind of economic conditions that South Africa desperately needs.”


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