Payments infrastructure company BankservAfrica's Economic Transactions Index (BETI) reached 130.4 in November, which is the exact same figure as November 2022, slipping from the level of 130.8 recorded in October.

After a stronger-than-expected first half of the year, economic activity has levelled off in the final months of this year. The BETI data confirms that economic activity surprised on the upside in the first half of this year, while the gains were reversed in the subsequent five months.

“The record spate of loadshedding, elevated interest rates, a lacklustre job market and low confidence levels have led to the economic narrative remaining underwhelming. Despite the growing number of industries improving their resilience in recent months, the economy remains unable to gain sustainable momentum,” says independent economist Elize Kruger.

The cumulative impact of the many challenges that have been playing out in the economy over the past 18 months has reached its harshest as confidence levels remain under severe pressure, and there is no clear end in sight for the ongoing challenges, she highlights.

The renewed upward trend in inflation indicators in recent months has had a negative impact on the BETI, expressed in real terms. The spike in consumer price inflation from 4.8% in August to 5.4% in September, and further to 5.9% in October was mostly driven by renewed pressure on the rand exchange rate, with negative consequences for imported prices, higher food prices and fuel price hikes.

The international oil price subsided in recent weeks, which should result in a reversal of the bulk of recent fuel price hikes. However, inflation remains somewhat above the mid-point of the South African Reserve Bank’s 3% to 6% target band. Therefore, interest rates are forecast to remain at elevated levels in the coming months, she adds.

“There are already clear signs of stress among households, resulting from weaker household finances, higher interest rates, fragile consumer confidence and cautiousness among lenders. We expect the December holiday period to reflect a continuation of this trend,” says Kruger.

In November, the intensification of the Durban port crisis was the main driver of the sharp decline in supplier performance, with firms seeing lead times lengthen considerably.

“The BETI readings for the first two months of the fourth quarter signal that the economic hardship has continued. With a quarterly contraction in real gross domestic product already recorded in the third quarter, which was anticipated in previous BETI reports, this will spur the possibility that the economy could have dipped into a technical recession in the fourth quarter,” she notes.