After a buoyant first quarter that saw the economy expand faster than expected and the current account surplus widen, a spate of data strongly suggests that the party came crashing to an end this quarter. Data released on Thursday showed that mining and manufacturing production tanked in April, adding to an emerging picture of renewed economic woe.
The mining sector has been one of the star performers of the South African economy, but that is like being the highest hill in Holland. Nevertheless, the sector’s reboot in the early stages of the pandemic and red-hot metals prices translated into record company earnings and a tax windfall for the Treasury just when it needed it most.
Among other things, this has been reflected in hefty current account balances, which in turn have kept the rand afloat, South African Reserve Bank data on Thursday showed. The surplus on the current account of the balance of payments widened to R143-billion in the first quarter of this year from R132-billion in the fourth quarter of last year. This is a good thing and helps, for example, to keep the prospects of an International Monetary Fund bailout at bay.
South Africa’s trade balance also widened…