Slight but uninspiring increase for the BETI in January

‘More-of-the-same’ can be expected in 2023 as challenges to the economy prevail  

After breaking six months of declines in December, the BankservAfrica Economic Transactions Index (BETI) improved again in January 2023. Yet, despite this positive movement, ‘more-of-the-same’ can be expected this year as economic woes prevail.

“The BETI improved to an index level of 132.7 in January, showing a monthly increase of 0.4% and 0.3% year-on-year growth – though significantly lower than the all-time high of 143.5 in May 2022,” says Shergeran Naidoo, BankservAfrica’s Head of Stakeholder Engagements.

Although the BETI has improved during all measurement periods, it is still simply a blip. “January has been quite bleak with load shedding continuing unabatedly, interest rates climbing, and inflation persisting at excessive levels. “The impact of the global economic slowdown remains prominent,” says independent economist Elize Kruger.

The latest round of lower adjustments to South Africa’s economic growth estimates has put a shadow over January’s progress. The South African Reserve Bank has reduced its prediction for 2023 from 1.1% to 0.3%. With average population growth closer to 1.3% per year, these growth rates mean that the ordinary South African person will become poorer in 2023.

Like the BETI, other nowcast indicators held up reasonably well in January, except for the S&P Global South Africa Purchasing Managers Index (PMI), which shows business activity contracted to 48.7 points in January, registering below the 50.0 mark for the first time in three months. The Absa Purchasing Managers’ Index (PMI) moved sideways at 53.0 in January 2023 vs 53.1 in December. The pace of vehicle sales growth moderated somewhat in January but remains 4.8% higher compared to a year earlier. Globally, the latest J.P. Morgan Global Composite PMI – compiled by S&P Global across over 40 economies and sponsored by J.P. Morgan – recorded a second successive monthly rise that has helped to allay concerns of a worldwide recession. At 49.8 in January 2023, up from 48.2 in December, the Global PMI signalled the smallest drop in output observed over the past six months. 

In January, the standardised nominal value of transactions cleared by BankservAfrica was R1.04 trillion, compared to R1.3 trillion in December 2022. The number of transactions declined from 143.6 million in December to 135.7 million in January 2023, a record low. In January 2023, the number of debit (+16.6% y/y) and credit (+19.0% y/y) transactions increased significantly, showing the solid growth trend in the volume of electronic payments, notably in the DebiCheck (58.9% y/y) and Real-Time Clearing (54.3% y/y) payment streams.

“While the improvement in the BETI is encouraging, stormy clouds are gathering with many indications showing we could expect ‘more of the same’ in 2023, as the main challenges prevail,” says Kruger. Load shedding is unlikely to end anytime soon, and consumers will stay under pressure as a result of high inflation, interest rates, and a tight labour market.

“Thus, just as 2022 was characterised by an economic scenario of ‘muddle-along-little-thriving’  given all the multiple headwinds plaguing the economy, one month in, we can expect to experience more of the same in 2023,” ends Kruger.