Does stronger economic activity indicate improved GDP?

Stronger economic activity, as demonstrated by the increased number of electronic transactions in South Africa in June, can indicate an uptick in GDP for the second quarter after a disappointing first quarter.

According to the BankservAfrica Economic Transactions Index (BETI), that measures the value of all electronic transactions cleared through BankservAfrica on a monthly basis at seasonally adjusted real prices, the BETI improved for the second consecutive month in June, indicating a more optimistic outlook for economic performance in the second quarter.

“The BETI increased in June to an index level of 139.1, representing growth of 0.4% in June and a second month of recovery,” Shergeran Naidoo, head of stakeholder engagements at BankservAfrica, says.

“After months of choppiness, the improved BETI signals a positive shift in overall economic activity in the second quarter, which could also be reflected in a favourable gross domestic product (GDP) outcome when Statistics SA publishes it in early September.

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Welcome uptick in economic activity

Elize Kruger, an independent economist, says the uptick in the BETI is welcome, especially given that the economy started 2025 on the backfoot, with quarterly growth of only 0.1% in the first quarter and confidence indicators declining across the board.

“While several sectors entered a technical recession in the first quarter, recent indicators suggest a rebound in mining and manufacturing, with both sectors likely returning to growth in the second quarter.

“While some sectors remained resilient, others are still struggling amid ongoing challenges and notable risks. The renewed uncertainty about the impact of US import tariffs, not only in South Africa but across the globe, does not bode well for confidence and investments and will increase the downside risk to growth forecasts in 2025 and beyond.”

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Although South African exports are expected to come under pressure from higher US import tariffs, the elevated gold price and significantly lower international oil prices could soften some of the impact, Kruger says.

“Furthermore, a considerable share of South African export commodities has been exempted from the announced US import tariffs, which could provide a buffer for the mining industry and subsequently provide some support for the economy.”

Other economic data also shows continued recovery

The BETI’s continued recovery is also reflected in other timeous economic indicators. naamsa data revealed that total vehicle sales improved by 18.7% in June, with year-to-date sales up by 13.6% compared to a year earlier, while new car sales in June grew by a notable 21.7% y/y and year-to-date were a notable 21.3% ahead.

The S&P Global South Africa Purchasing Managers’ Index (PMI) remained in expansionary territory with an index level of 50.1, though down from 50.8 in May. Although the report noted ‘mixed signals’ from the underlying components, the average quarterly reading was higher than in the first quarter.

On the other hand, Kruger says, the seasonally adjusted Absa Purchasing Managers’ Index (PMI), reflecting on prospects in the manufacturing sector, remained in contractionary territory for an eighth consecutive month at 48.5 index points, but up from 43.1 index points in May.

After reaching an all-time high of 176.3 million in May 2025, the number of transactions cleared through BankservAfrica moderated somewhat in June to reach 167.3 million, still 13.5% up on a year ago, Naidoo says.

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Value of economic transactions also increase

The standardised nominal value of transactions also increased to R1.361 trillion in June compared to R1.351 trillion in May 2025, with the resultant average value per transaction covered in the BETI increasing to R7 747, compared to May’s R7 618, showing a 1.7% monthly increase.

 Kruger says locally some structural tailwinds should also continue to buffer the economy against global headwinds. Headline inflation remains below the South African Reserve Bank (Sarb) 3-6% target band at 2.8%, according to May’s print.

“The average 2025 forecast is expected to be around 3.5%. The favourable inflation environment created ample scope for the Sarb to cut interest rates.

“Carpe Diem Research Services forecasts a 25 basis points cut to be announced at the upcoming Monetary Policy Committee (MPC) meeting on 31 July. This will likely be the final cut in the current downward cycle.”

She adds that the low inflation environment will aid the recovery of salary earners’ purchasing power. “With average salary increases expected to be between 5% and 6%, 2025 will be the second consecutive year of real increases in salaries.”