Payments infrastructure and services company BankservAfrica's Economic Transactions Index (BETI) improved to 133 in December, owing to less loadshedding and fuel price cuts during the month. On a year-on-year basis, the BETI was 0.6% higher in December.
The standardised nominal value of transactions cleared through BankservAfrica in December increased to R1.39-trillion from R1.27-trillion in November. The number of transactions also increased to an all-time high of 163.1-million compared with the prior month’s 158.5-million.
As the economy gradually migrates towards low-value digital, instant payments, the average value of transactions measured in the BETI will continue to decline over time. The average value of transactions in December was 4.8% lower compared with a year earlier, BankservAfrica notes.
However, while the latest reading is welcomed, it is unlikely to signal the start of a significant economic turnaround in 2024, the company says.
Further, the average BETI level for 2023 was 0.5% lower than the 2022 average.
Additionally, despite the recovery, the December index was 0.5% lower compared with September, signalling that the economy remained strained in the fourth quarter. With a quarterly contraction in real gross domestic product already recorded in the third quarter, there is a slight possibility that the economy could have dipped into a technical recession in the fourth quarter, says independent economist Elize Kruger.
“During the first half of 2023, economic activity surprised to the upside, but disappointed in the final months when these gains reversed,” she adds.
“Many headwinds plagued the economy during the year, including record levels of loadshedding, elevated interest rates, a lacklustre job market and low confidence levels among households and businesses. The economic narrative has remained largely underwhelming and despite several industries having become more resilient against loadshedding and other challenges, the economy struggled to gain sustainable momentum,” she noted.
A notable improvement in economic growth is unlikely in 2024; however, some positive developments could lead to a welcomed uptick, Kruger says.
“Specifically, the expectation of lower international interest rates could spur a better performance in the rand exchange rate, which will likely contribute to a moderation in consumer inflation. Subsequently, at least 75 basis points in interest rate cuts could be expected during the year. Real gross domestic product growth is forecast at 1.3% in 2024, compared to an estimate of 0.6% growth in 2023.
“An acceleration in structural reform remains critical to lift South Africa’s potential growth rate, as the current levels remain woefully inadequate to address South Africa’s socioeconomic challenges,” she emphasises.