The looting and rioting that have laid waste to a swathe of businesses in KwaZulu-Natal and Gauteng in the wake of former president Jacob Zuma’s jailing will curtail economic growth this year but are not expected to spark a rate cut this week when the central bank’s Monetary Policy Committee meets.
Of course, “normalisation” would imply a “normal situation” and South Africa’s wildly distorted political economy, always abnormal at best, is currently bug-eyed and baying at the moon. Sarb’s revised growth forecast will be of more than passing interest when the MPC’s decision is unveiled on Thursday, 22 July. Its forecast in May was for growth of 4.2% in 2021 after a 7.0% contraction last year.
The rand has also been underpinned by surging prices for key commodity exports which have translated into hefty trade, terms of trade and current account surpluses. But that hinges on getting the exports out through ports, notably Durban, and key economic arteries such as the N3 were still blocked as we went to press.