The BETI saw “the number of transactions reaching an all-time high of 110.5 million in October 2020, which was an 8.8% increase on October 2019,” said Economists.co.za, which calculates the index, in a statement. 

“This is certainly unusual; the last time the number of transactions increased at this rate was in October 2018,” Economists.co.za said. The economy is widely believed to be on a rebound from the second quarter collapse when it contracted 51%, but is it really full steam ahead? Probably not, but emergency fiscal measures taken by the government may be translating into a temporary stimulus – which, of course, is their purpose.

“We believe this was driven by an increase in TERS and SRD grant payments. We do not include these payments in the actual BETI but, as individuals tend to spend this additional relief money in the rest of the economy, the result is the ‘spillover’ effect in the BETI data. The increases in the BETI from the extra income and salaried payments saw Electronic Fund Transfer Credit (EFTC) payments, in particular, increase by nearly 12% over the last two months compared to a year ago,” Economists.co.za said. 

The actual BETI itself reached 122 index points, but that measures the value of transactions and while the highest level since February 2020, was not a record. This suggests transactions being undertaken by households or companies that have access to cash but not in excess. And that party will soon be over. 

“We believe that the BETI will see a decline of around 4% to 5% as these extra payments get withdrawn. This will not be as big as the dive seen in the lockdown period, but the removal of the extra payments will have a small, yet significantly negative impact on the South African economy. In the near-term, we may see consumer spending on the rise for Black Friday and Cyber Monday as some in-store retailers have opted to run month-long or weekly sales to keep in line with the COVID-19 social distancing while others prepare for major online spend over the usual long weekend of sales in late November 2020,” Economists.co.za said.  

“The extra money flowing into the South African economy makes the economy look stronger, but the fact is much of this is from loans that must be paid back over time. It is therefore impossible to expect these payments to be able to continue at its current pace. As such, although there is a recovery, it is not sustainable into the long-term when these payments cease.  It will be difficult to cut back on the social relief pay-outs, but it will be economically impossible to continue at this rate while tax revenue remains under pressure,” it said. 

The upshot is that this could put a brake on the expected momentum of the economic recovery in the New Year. This is clearly a space to watch. DM/BM