Earlier this week, Stats SA published a bleak GDP update for South Africa that saw the domestic economy shrink -7.0% y/y in 2020. Perhaps a little better than expected but still a huge contraction.
But that was last year and is old news now.
A more relevant question is how we are doing right now?
I am going to unpack two real-time indicators of our economy below—with their pro’s and con’s—and, hopefully, this will give us a sense of how things are across our country:
(1) Yoco Small Business Turnover Index (LINK)
Yoco offers a point-of-sale card machine to predominantly SME’s across South Africa. The business has taken its network’s real-time payment data, consolidated it, and published it via a portal on their website.
| Pro’s: As SME’s are generally more fragile and cyclical than larger businesses, if this index is doing well, then the odds are that the larger, listed businesses are doing at least equally well. Also, there is little data out there on our SME sector, thus this data reveals a key blind spot in many datasets. | Con’s: Visa and Mastercards results over the last twelve months have revealed that the pandemic has accelerated the move from (contact-based) cash payments to (contactless) card payments. Hence, this index arguably could be overstated due to a shift away from cash towards card. Finally, the index may be over or understated simply due to Yoco’s own success in signing up new clients. |
As of the date I write this (12/03/21), Yoco’s Small Business Turnover Index is currently tracking at 91% (i.e. -9% below baseline). Rolling the data back a month to the 12th of February, the Index was at 95%, thus it appears to have weakened somewhat over the month, though it has held over 100% during periods this year so far.
Provisionally, Gauteng is only 97% (i.e. -3%) while the Western Cape has dropped to a miserable 80% (-20%). Interestingly, the Free State (101%), Eastern Cape (106%), Northern Cape (107%), KwaZulu-Natal (111%) and Northwest Province (127%) are all tracking above 100%.
If you have a look at the index, it has tracked in aggregate greater than 100% for most of the period from late January 2021 till the present. Thus, perhaps this is just a bad time to check it (e.g. mid-month seeing lower nominal payments than one would see just after pay-day?).
(2) Google’s COVID-19 Community Mobility Reports (LINK)
Google tracks the mobile phones running its Android software and, if we assume their movement and locations are good proxies for the people they belong to, then this data is a neat real-time indicator of both activity levels and behaviour in an economy.
Similar to Yoco—but global in its reach—Google has aggregated the data and published it in a dashboard that you can search across countries. Furthermore, it tracks this activity relative to pre-COVID benchmarks.
| Pro’s: Mobile phones are great proxies for people and Android’s major market share in Emerging Markets makes it a statistically significant proxy for EM’s, like South Africa (Apple tends to have a higher market share in most Developed Markets). | Con’s: The data excludes anyone not using an Android phone or any region that Google is not in (e.g. China). Finally, the aggregation definitions are hidden to us as well as anything else granular (e.g. we have to trust that Google has classified shops correctly from offices, etc). |
South Africa’s current Google mobility data can be summarized as follows:
- Retail & recreation: -11% (not boding well for our shopping centers)
- Grocery & pharmacy: 9% (looking great for Shoprite and Clicks!)
- Transport: -30% (one of the reasons why there is still no traffic in Sandton)
- Workplaces: -2% (higher than expected but coupled with residential below indicates many are still working from home)
- Residential: 8% (great for DIY, build materials & residential properties demand/prices – see here as further evidence)
How does this compare to another EM? Countries make for imperfect comparisons, but let us use Brazil as a comparison (partly because they are an EM with commodities but also partly because they did not lock their economy down anywhere near as hard as South Africa did):
| Week: 7 March 2021 | Brazil | South Africa | How are we doing? |
| Retail & recreation | -51% | -11% | +40% better than Brazil |
| Grocery & pharmacy | 4% | 9% | +5% better than Brazil |
| Transport | -36% | -30% | +6% better than Brazil |
| Workplaces | -9% | -2% | +7% better than Brazil |
| Residential | 10% | 8% | -2% better than Brazil |
The more people move out of their houses, the more are at work, moving around and/or shopping, surely the better an economy is performing? Assuming this line of reasoning is correct, South Africa is doing materially better than Brazil (right now).
Conclusion The above real-time stats are far from perfect and far from representative, but they both point to a conclusion: South Africa’s economy has recovered quite a bit but is still operating below pre-COVID levels. Despite this, global comparisons do highlight that things could be much, much worse and, just perhaps, our country is faring alright (for an EM) through all of this.
ARTICLE ORIGINALLY APPEARING HERE.