After two consecutive months of encouraging growth, the BankservAfrica Economic Transactions Index (BETI) fell to 131 in February, a 1.9% year-on-year decline, signalling the country’s deteriorating economic activity and that the persisting pressures in the economy are hurting businesses and consumers.

At an index level of 131, the BETI for February slipped to October’s level and declined by 1.3% on a monthly basis, unlike the increases of 1.4% and 0.4% experienced in December 2022 and January, says BankservAfrica stakeholder engagements head Shergeran Naidoo.

“The notable moderation in the BETI [in February] reflects the pressures that businesses in the country’s main economic sectors are experiencing from the prevailing dismal economic context, namely continuing loadshedding, interest rates and inflation remaining at elevated levels in addition to the global economic slowdown,” notes independent economist Elize Kruger.

Evidence of the impact and cost of loadshedding is shown in the Statistics South Africa data indicating the economy contracted by 1.3% in the fourth quarter of 2022 on a quarterly seasonally adjusted basis. Retailers have also shared their predicted losses and costs stemming from business-as-usual during the severe loadshedding.

These cost increases are either likely to be passed on to the end product price, fuelling consumer inflation or leading to lower margins, she adds.

Economic activity during February was also mixed, according to the BankservAfrica data.

“During the month, the value of standardised nominal value of transactions was R1.17-trillion in February, a growth from the R1.04-trillion in January. However, the volume of transactions slowed to 133-million during the month compared to the 135.7-million tracked in January,” says Naidoo.

“The renewed moderation in the BETI, after only two months of marginal improvement, confirms that the economic environment remains challenging and that the economy remains in a muddle-along-little-thriving narrative. While actions were recently taken and projects have been announced in the energy and transport sectors of the economy, little reprieve can be expected in the short term,” states Kruger.

The urgency to resolve the ongoing loadshedding scenario cannot be stressed enough, as it is hurting production, productivity and confidence, she emphasises.