CAPE TOWN - South Africa was squeezed into a tight corner this week in whatever way you look at it. Be it the rand, the struggling economy and our ranking on global property rights.
First off, the rand. The local currency took a further hammering this week, slipping more than 10 percent in 24 hours and breaching the R15 mark against the greenback, thanks to trade tensions between the world’s largest economy, US, and Turkey.
South Africa was affected because the sell-off in the Turkish lira had spread across emerging markets.
And that’s not all, the looming trade war between Washington, DC, and Ankara over American pastor Andrew Brunson, detained in Turkey over espionage charges, is peculiar.
Turkish Recep Tayyip Erdogan was among world leaders who attended the 10th BRICS Summit in South Africa last month, where US President Donald Trump came under heavy scrutiny for his controversial protectionist stance and trade war with China.
Erdogan also held a private meeting with President Cyril Ramaphosa. This week Trump announced the doubling of tariffs on Turkish steel and aluminium, prompting Erdogan to respond with tariffs of 120 percent on US cars and 140 percent on alcoholic drinks.
Erdogan also reportedly called for a boycott of Apple products in favour of Samsung, and a general ban on importing electronic goods from the US. This is but one of the reasons how the rand got to be where it is currently.
This is but one of the reasons why the rand was so reactionary this week.
On global property rights, South Africa which has given the greenlight on land expropriation without compensation, slumped 15 places to 37th in the latest
International Property Rights Index, the largest drop by any country.
South Africa ranked 22nd globally and first in Africa last year. The Index is compiled by the Washington-based Property Rights Alliance and was released in partnership with the Free Market Foundation of South Africa.
The Index also saw South Africa’s score declining this year by 0.65 points to 6.35 points from 7 points last year on a grading scale where the highest possible grading is 10 points.
This week also saw the economy escaping a possible recession by the skin of its teeth in the second quarter.
This is thanks to the back-breaking mining sector which increased production output by 2.8 percent year-on-year in June. And this was above market expectations of a 0.5 percent gain.
Data from Statistics South Africa showed that mining output advanced 0.8 percent quarter-on-quarter in the period, following a 2.2 percent contraction in the first quarter.