It must come as a surprise how resilient the South African economy can be. Despite a lack of leadership, adverse labour relation circumstances and in (candle)light of the on-going electricity crisis, it seems the economy is showing its claws, climbing back on the pedestal it once stood on, waiving a flag at Nigeria and shouting: “Look who is coming back!”
h3. Manufacturing Sector
The manufacturing sector surprised in its May Data, showing the performance index (Kagiso) well 10% higher than in April and crossing the 50 point threshold for the first time in months. It is not only the natural recovery from all the South African holidays, that usually stick like lead to the consumer-feet, it is new sales and orders for components that indicate how the manufacturing sector has learned to “cope by planning” around the load-shedding intervals. Kudos for production managers and business owners, who don’t take a “no” from ESKOM as an answer and increasingly bridge the power nirvana by utilising Solar Power and Diesel Generators.
Make no mistake, the current positive development might be short-lived. Price increases in petrol, electricity and labour, paired with a weaker Rand might pull on the brakes sooner rather than later.
h3. South African Rand
But talking about the Rand, yes our dear Randelas have calmed down to a panic below 12 to the Greenback. But – also here – that might be short-lived. Greece has defaulted towards the IMF and has not paid back EUR 1.6bn at the end of June, that much is sure. Greece will have to make some drastic, politically internal, course corrections if they want to stay in the EU. International and local investors continue to watch the Soufflaki-Saga continuing to unfold, but had built the Hellenic default already into their expectations. Hence it did not come as a surprise, but needs to be monitored carefully still!
h3. Trade “Deficit”
Back home some more good news: The current account balance translating the trade deficit into auditing figures saw a shift and after months of bad news on the trade deficit, turns out to be now a trade surplus. Again, since US Dollar-dependent, maybe only short-lived.
h3. Budget Deficit
The final good news is the narrowing of our budget deficit. No, it has not also transformed into a surplus, but the deficit narrowed, which is in light of the Butcher of Finance’s (Nene) freedom from fiscal knowledge quite spectacular. It is surely not his doing and therefore could continue to be a welcomed trend until the Mid Term Budget, read but not designed, by Nene in October.
To sum it up: well done private sector SA, claws out and ignoring any feather ruffling of our leadership on eternal holiday. When will the JSE replace the Cabinet again? Jamas!