Slight but uninspiring increase for the BETI in January

Johannesburg - 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’s improvement across all measurement periods signals some tentative improvement in the broader economy, it remains only a blip. “January has remained fairly grim with load shedding continuing unabatedly, interest rates rising, and inflation remaining at elevated levels. The impact of the global economic slowdown is also still dominantly present,” comments independent economist Elize Kruger.

Casting a shadow on January’s improvement is the recent wave of downward revisions to economic growth forecasts for South Africa. The South African Reserve Bank recently revised its forecast from 1.1% to 0.3% for 2023. With average population growth running closer to 1.3% per annum, these growth rates imply that on a per capita basis, the average South African citizen 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. 

The standardised nominal value of transactions cleared through BankservAfrica in January was R1.04 trillion compared to R1.3 trillion in December 2022. The number of transactions fell from an all-time high of 143.6 million in December to 135.7 million in January 2023. Strong growth in the number of both debit (+16.6% y/y) and credit transactions (+19.0% y/y) was recorded in January 2023, reflecting the robust growth trend in the volume of electronic payments, particularly 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. There is no indication that load shedding will abate anytime soon, and households will remain under pressure due to elevated inflation levels, interest rates and a tight labour market environment. “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.