The BankservAfrica Economic Transaction Index (BETI) shows its strongest year-on-year increase since August 2013 following a relatively weak May.
What makes this performance all the more surprising, says BankservAfrica is its occurrence in the face of persistent challenges, including power constraints, weak commodity prices and strikes. “Despite the current depressed climate, June’s index highlights that perhaps the economy is adjusting to the new situation.”
However, volatility remains the name of the game, it says. The quarterly changes increased by a percentage point to 0.4% from the -0.5% it was in May. This increase shows the unpredictable nature of the current economic cycle, which looks even bigger examining the month-on-month decline of nearly 1% between April and May, to an increase of 0.7% between May and June. This is a 1.6% upswing to the positive.
BankservAfrica says this is “a very strong change of direction, particularly considering that the effects of holidays and seasonality have been accounted for in these figures”.
In comparison to the last two years, the overall performance in June is impressive, although, in terms of the performance of the last decade, it may be considered average. Nevertheless, in the current depressed economic climate this average month stands out, it says.
The stronger April and June BETI performances indicate the economy is growing, despite intermittent power supply constraints, labour strike action and weaker than expected global commodity prices – which all conspire to create a level of uncertainty, it adds. BankservAfrica adds underlying growth trends are strong, despite constraints such as power cuts and strikes.
Should South Africa experience any further positive economic inputs, such as lower oil prices or stronger currency for example, the economy is likely to see much higher growth than the 2% it is currently managing, it adds.
A 15% drop in the oil price along with a rand that stays closer to R12 than R12.60 to the dollar, would certainly help the economy’s growth to nudge 2.5%. The elimination of load shedding for a year could help the economy grow by nearly 3%, it adds.
IOL