Although the country is not yet in recession, it is in per capita recession as income per capita has been in decline for a long period with South Africa’s economic growth being slower than population growth. In real terms, South Africans have seen their income decline for three years on average. All these indicators suggest that 2017 could be the fourth year of the per capita recession.
The November BankservAfrica Economic Transaction Index (BETI) was 1.2% lower year-on-reflecting the weak 2016 domestic economy, according to Dr Caroline Belrose, Head of Fraud and Data Analytics at BankservAfrica.
In addition, the quarterly decline of -2.2% in November continues a negative quarterly trend now seen for seven consecutive months in a row for the first time since December 2009.
The domestic economy is still in a vicious downswing and these figures suggest that a further GDP decline may be on the cards in Q4.
With South Africans poorer than they were in 2012 in real terms, the BETI should be closely monitored for any signs of a turnaround. At present, however, the November BETI suggests that the economic slowdown is getting deeper.
While the Q3 GDP growth of 0.2% was due to the strong growth in the mining and government and financial sectors, the rest of the economy was flat to negative. Manufacturing, agriculture, electricity as well as the wholesale and retail trade all shrank in Q3.
“The BETI indicates that Q4 may in actual fact be weaker than Q3, although it will be a close call,” explains Mike Schüssler, Chief Economist at Economists dotcoza. He adds: “One must also remember that a slower Q4 always influences the outcome of the following year as momentum is easier to maintain than to build up.”
Domestic spending and domestic production were both in the doldrums in 2016 and it looks like the big collapse in mining in Q1 hit other sectors in the economy. “If it were not for tourism and a pick-up in international commodity prices, the economy would have been even further in the doldrums,” says Schüssler.
Interestingly, the volume of transactions in November increased by 7.5% but the actual value in nominal transaction increased by only 0.5%. The standardised value of transactions was R796.2 billion and is 5% year-on-year higher in nominal terms.