China the driving force behind recovery

The economic rebound in East Asia and the Pacific has been “surprisingly swift and very welcome,” but take China out of the equation and the regional picture is “less rosy”, says the World Bank's half-yearly assessment of the economic health of the East Asia and Pacific region. The latest East Asia and Pacific Update, titled Transforming the Rebound into Recovery, says large and timely fiscal stimulus spending in most East Asian and Pacific countries – led by China and Korea – along with inventory - have driven the rebound in the region and contributed significantly to confidence in a global pick-up. South Africa’s strengthening rand is due, in part, to this upturn, according to Sanlam group economist Jac Laubscher. Writing in Sanlam Cobalt, Laubscher says reports of a recovery in China which started emerging in March his year “resulted in a strong recovery in commodity prices. It therefore does not come as a surprise that the rand has performed very much in line with other commodity currencies such as those of New Zealand, Australia and Brazil since March”. Reports of the recovery were backed by a South African trade surplus of R3.9 billion in September. The South African Revenue Service (Sars) said the surplus was mainly due to an increase in exports of 12.77% and a decrease in imports of 1.65%. Base metal exports were up by 24%, or R1.5-billion – the same as the growth in exports to Asia.