The apparent disconnect between developments in the real economy and the Covid-19 pandemic on the one hand and financial market performance on the other was again on display last week.
That’s according to the Bureau of Economic Research (BER).
In its Weekly Review, the BER states that the Johannesburg Stock Exchange and rand exchange rate strengthened despite the release of terrible data for South African manufacturing production in April and consumer confidence in the second quarter.
According to latest 2nd quarter (Q2) data, South Africa’s GDP is headed for historic decline in 2020.
Prospects beyond Q2 also remain uncertain.
The BER added that the economy had been dealt a further blow on Friday when Eskom was forced to implement stage 2 load shedding.
“The cold spell in much of the country led to increased power demand over the past week. At the same time, a number of breakdowns at Eskom generation units meant that electricity demand exceeded supply.”
In addition, Eskom yesterday said its generation system would likely remain constrained this week, risking more load shedding.
“As if this was not enough bad news, last week’s truck driver strike is set to continue this week. These developments again highlight that the recovery in local economic activity from the April lows will be a stop-start affair,” the BER stressed.