Economic transactions dive 3.3% in March, with more pain to come

Economic transactions in SA dropped sharply in March as the coronavirus pandemic knocked consumers and the economy.

Data gathered by the BankservAfrica Economic Transaction Index (BETI), a monthly indicator of economic activity in the local economy, indicated that the economy was  shrinking rapidly.

“In March, the index declined by 3.3%. Seasonally adjusted,  this is the sharpest drop since August 2008,” said Shergeran Naidoo, head of stakeholder engagements at BankservAfrica, on Wednesday.

“It demonstrates the huge toll of coronavirus on the economy. To get a full picture, year-on-year the BETI declined by 0.4%. However, on a quarterly basis, this was 3% — the biggest drop since January 2016,” added Naidoo.

“Monthly transaction movements are not unusual. However, when the drop is as steep as March's, we have good reason to take note of it as it suggests a potential sharp decline in the South African economy,” said Mike Schüssler, chief economist at economists.co.za.

“More concerning is that our other data indicates this is not the end; we could see a much worse decline in April and very possibly in the months thereafter.” 

According to BankservAfrica, the volume of transactions increased but the average value per transaction fell by 1.1% in real terms.

“The number of transactions recorded in the BETI was 103.3-million for March. Though it was 3.3% up, the real value declined by 2.7%," said Naidoo.

This could be due to wholesalers, manufacturers and retailers, including pharmacies, making bulk stock purchases. These were in addition to the stockpiling by households. However, the value declined as consumer spending for higher priced items, such as vehicles, slowed down.

“The nationwide lockdown from late March helped lift consumer spending. Transactions spiked as South Africans rushed to the shops just before it was implemented. But activity soon quietened down,” said Schüssler.