Lower consumer demand is hindering economic health, Lesetja Kganyago says
Ructions in the rand pose inflation risks, he said, and there's no knowing what the US will do next
The recovery in economic activity is expected to be "weak and choppy", South African Reserve Bank governor Lesetja Kganyago has cautioned. This was especially because consumer demand slowed again in the second quarter of 2018, Kganyago said in a briefing to parliament’s finance committee on Wednesday. The bank expects modest GDP growth in 2018 and Kganyago said this should be lower than initial expectations. The Bank has projected average growth rates of 1.2% for 2018, 1.9% in 2019 and 2% in 2020. The governor said that while inflation remained within the inflation target, Bank "risks are on the upside" and included the weakening exchange rate, rising oil prices and increasing electricity prices, and remuneration increases in excess of inflation and productivity.
"Anchoring inflation expectations at the midpoint of the inflation target range will ensure that inflation remains firmly within the inflation targeting range thus limiting the need for MPC (monetary policy committee)...