subscribe Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Subscribe now
Reserve Bank governor Lesetja Kganyago. Picture: Freddy Mavunda/Business Day
Reserve Bank governor Lesetja Kganyago. Picture: Freddy Mavunda/Business Day

SA’s economic outlook had improved since last year but the inflation picture was more muddied and risks abound, SA Reserve Bank governor Lesetja Kganyago said in Davos on Tuesday.

Growth in SA — Africa’s most industrialised economy — could be close to 2% in 2025, up from 1.1% projected for 2024, Kganyago said in an interview at the World Economic Forum’s (WEF’s) annual meeting in Davos, Switzerland.

“Depending on who is forecasting, growth varies between 1.6% and 2% (this year). We think ... it would be closer to 2% than 1.6%,” he told the Reuters Global Markets Forum.

Kganyago cited the formation of the government of national unity last year as one of several enablers of faster growth.

“The structural reform agenda has gained momentum and it has been given impetus by this government of national unity, with a very clear focus on taking SA’s economic trajectory to the next level,” he said.

The coalition that emerged after the ANC lost its parliamentary majority includes the business-friendly DA and a host of other smaller parties from across the political spectrum.

Investors are optimistic that reforms in key sectors such as electricity, freight rail and the visa system will accelerate and lift the annual growth rate beyond the meagre 1% it has averaged over the past decade.

Kganyago warned that SA’s inflation outlook could be muddied by factors including protectionist policies with the return of US President Donald Trump to the White House.

Risks including the rand exchange rate, the global oil price and local food prices meant there were “too many moving parts” to have a clear view on price pressures, he said.

Annual consumer inflation was at 2.9% in November, below the central bank’s target range of 3%-6%, though it is expected to rise in December and average about 4.5%, the midpoint of the range, this year.

The Bank cut interest rates at its last two meetings of 2024, and many analysts expect a further cut at its first announcement of the year next Thursday.

Reuters

subscribe Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Subscribe now

Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.