The prevailing uncertainty about the outcome of negotiations and what that would mean for the economy’s prospects and economic policy in general is keeping investors firmly in a “wait-and-see” mode, especially relating to capital expenditure plans.
This was said by independent economist, Elize Kruger, during the release of the BankservAfrica Economic Transactions Index (BETI) yesterday.
The BETI recovered further to an index level of 136.2 in May, reaching the highest level since June 2023 and improved by 1.4% on a monthly basis.
The index recovered further in May, contributing to a positive outlook for the economy in the second quarter.
However, there may be uncertainties in the months ahead due to the current coalition government discussions, it said.
“Since the end of March, South Africans have been load shedding-free, which has created a more productive economic environment, while the additional activity relating to the national elections in May would have also played a positive role, partly due to additional workers temporarily employed in the run-up to election day,” Kruger said.
An analysis of the BETI’s historical performance showed that in 6 of the 9 elections under review, economic activity picked up in the month prior to the election month, while in 8 of the 9 cases (2024 included) the BETI increased in the election month itself.
While other developments in the economy were also reflected in the BETI, election-related spending could be seen to have made a meaningful impact on the monthly BETI in the period around election dates.
The authors of the index said showing a third consecutive monthly increase, the latest BETI figure was an early signal that the economic performance in the second quarter could surpass the first quarter.
Looking at the BETI performance in the months after each election revealed that in 4 of the 8 cases, the BETI declined on a monthly basis, remained unchanged in one instance, and only increased in 3 of the 8 cases (note: the 2024 data is not yet available).
Therefore, the authors said some slack in the BETI in June 2024, should it be realised, would not be unexpected.
Meanwhile, some divergence was evident among other nowcast indicators during May.
Both the Absa Purchasing Managers’ Index (PMI) and new vehicle sales numbers plummeted, with “uncertainty due to the election’s potential outcome” cited as one of the underlying reasons.
The standardised nominal value of transactions cleared through BankservAfrica in May increased to R1.301 trillion versus R1.290trln in April, while the number of transactions moderated to 155.3 million compared to 157m in April.
Among the different payment streams captured in the BETI, PayShap was again the star performer during May.
The cumulative number of transactions surged to 30m in May since its launch in March last year, as the gradual migration of transactions from legacy payment rails to PayShap by some of the participating banks, has contributed to the rising transaction numbers.
Overall, the institution said the BETI signalled a continuation of positive momentum in economic activity in the first two months of the second quarter, a welcomed development following a dismal economic performance in the previous quarter.
BUSINESS REPORT