The BankservAfrica Economic Transactions Index (BETI) increased in June to an index level of 133.6, which is the highest since July 2022.

It compares with 132.3 in May, which provided an encouraging outlook for South Africa’s economy in the second quarter.

While it remained in negative territory on a yearly basis, it was less than the preceding months. On a year-on-year basis, the BETI declined by 2% in June compared to June 2022, which is a lesser decline compared to the 7.4% decline in May compared to May 2022.

“Although the index has been choppy in recent months, moving mostly sideways in the past year, the recovery in June is encouraging and reflects the positive impact of a few specific factors in the economy in June,” explained independent economist Elize Kruger.

The severity of loadshedding subsided notably in June as State-owned Eskom shed 712 GWh, which is substantially lower than the 2 042 GWh of loadshedding in May, supporting all sectors in the economy. Some sectors have also implemented alternative energy sources, thereby becoming more resilient in the face of loadshedding, she said.

Further, the notable moderation in consumer inflation has also had a positive impact on the index’s performance in real terms. Consumer inflation moderated from 7.1% y/y in March to 5.4% y/y in June, and is a return to the South African Reserve Bank’s 3% to 6% target band for the first time since April 2022, she noted.

“The moderation in consumer inflation will go some way in reducing the extent of the erosion of purchasing power that households have had to deal with, especially in the past year,” she said.

However, with many challenges remaining, including elevated interest rates, policy and political uncertainties and low confidence, among others, and while still in mid-winter with potential of higher levels of loadshedding, the improvement in the BETI is not necessarily the start of a sustained synchronised economic recovery.

“It does signal that the economy has probably fared better in the second quarter than initially expected. The BETI signals a positive quarterly growth rate in the second quarter, with the June BETI 2.6% higher than in the quarter ending March 2023,” said Kruger.

Further, the standardised nominal value of transactions cleared through BankservAfrica in June 2023 was R1.21-trillion compared to May’s R1.18-trillion, while the number of transactions moderated somewhat from 147.2-million in May to 145.2-million in June 2023.

As the economy gradually migrates towards digital payments, the average value of transactions is declining over time. A comparison of the average value of transactions cleared through BankservAfrica in June to the average one year earlier, reveals a 5% drop to R8 193 vs R8 623 in June 2022.