South Africa

South Africans are spending less

An index measuring South African economic transactions fell for a third successive month in August, suggesting that the economy is struggling to gain broad-based momentum after contracting in the second quarter.

The BankservAfrica Economic Transactions Index, or BETI, which tracks interbank payments, dropped to 131.6 from a revised 134.2 in July.

“The monthly contraction in the BETI is not unexpected as the economy continues to suffer from recurring load shedding, significant rises in fuel and food prices and further increases in interest rates,” independent economist Elize Kruger said in a statement.

Severe power outages that were partly behind the economy shrinking 0.7% in the three months through June have persisted. State-owned electricity utility Eskom has implemented rolling blackouts on 38 days so far this quarter.

“In the light of the multiple headwinds, it appears the economy is simply unable to gain synchronized momentum across all sectors in the short-term, and we will continue experiencing a ‘muddle-along’ scenario,” Kruger said.

According to central bank forecasts, economic growth in the third and fourth quarters of the year will fall below 1%.

Extreme weather, rising interest rates, an erosion in consumer spending power, supply-chain bottlenecks stemming from China’s Covid Zero measures and Russia’s ongoing war in Ukraine are among the risks to the domestic growth outlook for the second half of 2022.

BETI is a fast indicator of underlying economic trends in the South African economy and correlates closely with key central bank indicators and the GDP data.

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