Economic indicator slips
The Bankservafrica Economic Transactions Index (BETI) slipped further in August, to 134 from 135.6 in July, amid volatile economic conditions.
“From the torching of multiple trucks on major transport corridors during July to the crippling taxi strike in the Western Cape in August, the economy generally remains on the back foot amid the ever-present load-shedding,” the release accompanying the index noted. “Furthermore, the rand exchange rate remains under pressure with negative consequences for imported prices, while renewed pressure on the international oil price has resulted in nasty fuel price hikes at the beginning of September, signalling renewed upward pressure on consumer inflation in the near term.”
High interest rates have also hit confidence in the economy, the release suggested, “with no near-term reprieve expected … and clear signs of stress among households”. But it is unlikely that the South African Reserve Bank will opt to hike interest rates any further, especially given that inflation expectations have fallen significantly.
According to a survey by the Bureau for Economic Research, the third-quarter decline marks the first drop in average 2023 expectations in two years. That said, the inflation rate for August, due next week, will probably see a small uptick after the sharp fall in July.
Reflecting on the BETI, independent economist Elize Kruger noted: “It has become abundantly clear that the cumulative impact of many challenges that have been playing out in the economy during the past 18 months is now at its harshest, at a time when confidence levels are still under severe pressure.”