A return to “normal” economic growth may not be
entirely satisfactory to the average South African, but with the BankservAfrica
Economic Transaction Index (BETI) indicating that the economy is stabilising
after the recent shockwaves of labour upheavals and weakening of our currency,
“normal” should be cause for celebration.
“While the South African economy continues to grow at
a slower pace than we want it to, the fact remains that June 2013 was the 46th
month of an upswing, making this the second longest business cycle upswing in
the country’s history,” says Mike Schüssler, chief economist at
economists.co.za.
Since World War II, the longest upswings have taken
place after 1994, with the highest growth period being during the early 1960s.
“The BETI has on and off been indicating for the best
part of six months that the worst of the stagnation phase is behind the South
African economy and that things are getting back to normal. This does not,
however, imply that South Africa is in a boom period, but rather back to a
steady, albeit slow, growth period,” says Schüssler.
Normal growth would be the average growth rate in the
South African economy of 3.4%.
Factors confirming the return to normal (slow) growth
The return to normal growth indicated by the BETI is
further evidenced by new car sales being up by 3.3%, while total vehicles
sales, seasonally adjusted, are up by 4.4% for June. The Kagiso PMI also
increased by 1.2 points in June to 51.6. When the PMI is above 50,
manufacturing is considered to be in positive territory.
According to Schüssler, the PMI has now been there for
three consecutive months. “Both motor vehicles sales and the Kagiso PMI show
the same trend as the BETI – the South African economy is growing. It may not
be positively exploding, but it is more robust,” he says.
“Along with the February data, we feel that four of
the last six months have shown relative robust and more normal growth than most
of last year. With electricity distribution showing growth for two months in a
row in May 2013 after 13 months of decline, it is clear that more than one set
of indicators are showing a more positive trend than most of last year,” says
Schüssler.
Smaller trade deficits, relatively strong used car
sales, together with strong construction data in May also indicate that
activity across a range of sectors has picked up.
According to Schüssler, “the BETI indicates that the
second quarter GDP may be slightly above normal – at least partly making up for
the disappointment of the first quarter GDP numbers.”
The BETI in numbers
Currently, the South African economy seems to be
growing at a normal pace every two months and at a stagnation rate every other
month.
February, April and June show normal growth,
equivalent to around 3% to 3.5% of GDP, whilst January and March indicate much
slower growth rates. May seems to show only a small slowdown from an
exceptionally strong April.
Schüssler says the quarter-on-quarter growth in the
BETI has been positive for the first six months of 2013. The index reached
growth of 3.2% – the highest year-on-year rate since November 2012, and much of
this recovery has taken place during the last few months.
Despite fewer working days in June (compared to June
2012), there is still a small upward shift in June, indicating that the economy
is at least holding on to some momentum.
“This shows that the troubled waters of the second
half of last year are probably behind us.”
