Growing pains

Slow growth for the South African economy

Slow growth for the economy
Higher inflation and fewer jobs
In South Africa, the BETI has shown a month-on-month recovery of 0.6% in the economy. This is the first positive growth in four months. The BETI also showed a relatively strong year-on-year improvement of 2.9%. The actual BETI is thus higher than in August, but clearly lower than the April to June levels, indicating a weak economic recovery.

“The BETI confirms the trend whereby a slow recovery seems to be the new normal across the globe. It is able to provide close to real-time information on movements in the economy to decision-makers, based on both electronic and paper-based banking transactions between banks in South Africa's payment system” says Brad Gillis, CEO PSO business at BankservAfrica.
According to Mike Schüssler, chief economist at, the positive news from the BETI will probably not translate into massive growth any time soon.
“Rather, it is an indication of our economy fighting to get back on its feet. Year-on year and quarter-on-quarter, the numbers look good, but month-on-month it still shows a decline. All this simply means that we are recovering, but very slowly.
Even China’s export growth falling below 3% and their manufacturing PMI being around 50 (no growth), indicate that the fastest growing big economy is also seeing some sectors stalling. Imports to China have declined by 3% for the first time in more than three years, whilst manufacturing growth could be at two decades’ lows.
Schüssler says low growth does not bode well for inflation, since inflation is driven by cost-push pressures such as drought in the USA, Eskom power costs, as well as airport and port charges.
“The lower growth is perhaps good news in that jobs will be retained, but we should not expect significant growth in the labour market. We can count ourselves lucky that we have actually seen some jobs created in the first half of the year despite very low economic growth. Low interest rates and a higher government deficits are likely, as growth seems slower than, or as slow as, government predicts.”

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