SA economy likely to bounce back: Reserve bank governor

Photo_Web_Lesetja_Kganyago_160517

Reserve Bank governor Lesetja Kganyago said that raising lending rates would do little to attract new investments to the country after its credit rating was downgraded to junk.

PRETORIA - The South African Reserve Bank said economic growth is likely to recover in the second quarter.

These figures are due for release in September.

Governor Lesetja Kganyago was addressing the SA Reserve Bank’s annual general meeting when he said the country’s sluggish economy has turned the corner.

‘We believe that the worst is behind us and that growth in the second quarter of this year will be positive," said SA Reserve Bank Governor, Lesetja Kganyago.

The economy contracted in the first quarter of the year, following a similar decline at the end of 2016.

This plunged the country into recession for the first time since 2009, as it grapples with international credit downgrades.

But the bank predicts the economy will grow by 0.5% this year and by 1.5% in the next two years.

"This is clearly too low to make any meaningful inroads on unemployment," said Kganyago.

Unemployment is at a record high of almost 28%.

Last week the bank slashed its key interest rate for the first time in five years, following better than expected inflation figures.

The governor reiterated that the bank's main role was to defend the value of the currency.

His response follows recent political attacks on its mandate and proposed remedial action by the public protector.

"Our Constitution is very clear: the core mandate of the South African Reserve Bank is to protect the value of the currency in the interests of balanced and sustainable growth in the South African economy," said Kganyago.

The Reserve Bank will brief Parliament next week about the economic outlook and present its annual report.

It will also elaborate on the role and mandate of the bank after the public protector’s recommendation it focuses on the economic well-being of citizens. 

 

 

Paid Content