It turns out that the Q1 contraction in the South African economy coincided with a contraction in the economy of the United States. Who could have foreseen that? The US contraction has been blamed on foul weather.

What to make of this seemingly unrelated contraction in both economies? The jury will probably be out for a while on what this portends.

There had been an indication that the US economy was healthy and doing better than the general world economy. The contraction has seemingly been a bolt from the blue.

One thing, though. A contraction in SA is clearly problematic for the local economy. A US contraction could be a blessing or a curse, depending on the response of the Fed (and the SARB). Halting or even reversing tapering would affect the SA economy positively, but the contraction could also spook investors. We also wait to see the movement of the US$. Unfortunately, movements either up or down can both be a blessing and a curse for the SA economy.

One hopes the SARB has a nimble strategy in place to deal with either eventuality.

May have pushed South Africa into recession. But the restrictive monetary policies pursued by the South African Reserve Bank are also responsible, not just for this impending recession, but for the sluggish growth and stubbornly high unemployment.

While other central banks, notably the US Fed, the ECB and the Bank of Japan, loosened monetary policy and effected other measures to stimulate economic activity, the SARB has maintained a relatively tight stance. This policy is wrong and misguided.

The platinum strike should be resolved as soon as possible. But the SARB should craft and implement policies that are not just narrowly focused on inflation. It should also play its part in boosting employment and growth.