South Africa’s economic activity bounces back strongly from floods

A general view of a severely damaged home and of the road infrastructure following heavy rains and winds in Umdroti north of Durban, on May 22, 2022. Floods, mudslides and rainstorms struck the South African port city of Durban and surrounding KwaZulu-Natal province. (Photo by RAJESH JANTILAL

A gauge measuring South African economic activity bounced back strongly in May after the worst flooding in almost three decades left more than 400 people dead, damaged businesses and halted operations at the country’s biggest port the previous month.

FILE PHOTO – Residents of Umlazi township stand over a bridge and watch containers that fell over at a container storage facility following heavy rains and winds in Durban, on April 12, 2022. /Phill Magakoe

The BankservAfrica Economic Transactions Index, (BETI) which monitors interbank payments, rose to 143.5 in May from a revised 137.6 in April. That suggests a robust recovery of Africa’s most-industrialised economy, which was devastated by the COVID-19 pandemic.

The May data suggests a continuation of strong first-quarter growth, “which would be an encouraging outcome for an economy in dire need of sustained growth,” independent economist Elize Kruger said in an emailed statement from the automated clearing house.

Still, South Africa has the world’s highest unemployment rate, and tightening global financial conditions due to higher-than-expected inflation and choked supply-chains stemming from China’s targeted COVID-19 lockdowns, extreme weather and the war in Ukraine are risks to the domestic growth outlook. The central bank lowered its 2022 expansion forecast to 1.7 percent from 2 percent last month.

BETI is an early economic scorecard for South Africa in terms of growth trends and correlates closely with the central bank’s co-incident indicator and the gross domestic product data.

 

Original article published by Bloomberg Africa