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.
The BankservAfrica Economic Transactions Index, 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-industrialized 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.
South Africa’s economy is back at the size it was before the coronavirus pandemic struck, after expanding 1.9% in the three months through March, compared with revised growth of 1.4% in the previous quarter.
However, South Africa still 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% from 2% last month.