Data suggest SA may have entered a recession in quarter two
SA may have entered a recession in the second quarter of 2018, judging from a monthly index of the value of banking transactions published by BankservAfrica.
The interbank transaction clearing group reported on Wednesday that its BankservAfrica Economic Transactional Index (BETI) showed the biggest quarterly drop in five years.
The value and volume of banking transactions provides an indication of what more detailed economic data will show in a few months time.
Statistics SA reported in June that the economy, as measured by GDP, fell 2.2% in the first quarter of 2018.
A recession is defined as two consecutive quarters of GDP decline, and BankservAfrica’s June BETI reading adds to a growing list of indicators that SA’s economy continued to decline in the second quarter.
The BETI’s quarterly decline was 1.9%, the largest quarterly drop since 2013.
"The economy seems to still be contracting although the timing between the BETI and the overall economy is sometimes out of sync due to the BETI being monthly, and having leads and lags to the quarterly GDP changes," Economists.co.za chief economist Mike Schüssler said.
While the average value of transactions declined, the volume of transactions grew.
Lower commodity prices, power outages and disruptions on major trucking routes would have contributed to the second quarter’s economic decline, Schüssler said.
"The BETI is described as a monthly ‘nowcast’ indicator giving insight into actual real economic activity on the ground. Measuring the constant value of interbank transactions in the SA economy, the BETI shows interbank transactional levels are back to January’s, and reinforces the timid nature of the economy," BankservAfrica said in its media release.