EDITORIAL: There’s light ahead, but South Africa must get on top of domestic issues
If global central banks start cutting rates, South Africa’s outlook can improve — but only if the government and business tackle the electricity and logistics crises with greater speed
As Momentum Investments economist Sanisha Packirisamy writes in this week’s FM, the unexpected resilience of the US economy despite much higher interest rates has been a big surprise. This mattered in South Africa as well as other emerging markets that rely on foreign capital, as the US Federal Reserve was obliged to keep interest rates higher for longer.
The impact was felt most keenly by the rand, which has lost almost 30% against the dollar over the past 18 months. In turn, it meant domestic interest rates also had to remain higher for longer, punishing the consumer and curbing growth. Higher sovereign risk meant the government’s long-term borrowing costs remained elevated as well...
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