SARB Governor Lesetja Kganyago
By Thabo Mosia
The world is entering an era of new economic challenges, even as the recent ones have yet to be overcome, says South African Reserve Bank (SARB) Governor Lesetja Kganyago. Addressing the 104th annual Ordinary General Meeting of SARB shareholders in Pretoria, Kganyago highlighted the ongoing global recovery from the pandemic and the persistent risks it faces.
“The global economy continues on a long recovery path from the pandemic. This path has been a troubled one, and despite better prospects in recent months, remains beset by risks and vulnerabilities built up during the pandemic,” Kganyago said. “Inflation remains stubbornly high, and public debt levels globally are at record levels,” he added.
Kganyago noted that technological advancements carry both risks and opportunities, impacting cybersecurity and potentially boosting global productivity. He emphasised that inflation remains a major concern for central banks worldwide. “Although global inflation declined from 8.7% in 2022 to 6.8% in 2023 and continues to ease in 2024, it remains high relative to the 2–3% inflation targets that many countries are trying to achieve,” he said.
Restrictive monetary policies, recovery in supply chains, and resolution of other pandemic-related bottlenecks have contributed to the decline in inflation from its 2022 peak. However, the pace of disinflation has slowed, with consumer price inflation in the United States still at 3%, above the target of 2%.
Kganyago pointed out that in some economies, rising wages and sustained demand for services have kept inflation high. Emerging markets face additional challenges such as fiscal pressures and currency depreciations. “Policy commitment to reduce inflation back to targets has been strongly signalled around the globe, and central banks have generally been cautious in their approach to policy,” he said.
Despite higher-than-desired inflation, global economic activity has shown resilience. “Global growth surprised higher at 3.3% in 2023, despite considerable divergence in growth across individual economies,” Kganyago remarked. Nonetheless, global growth rates are expected to remain below pre-pandemic trends due to protectionist measures, tight financial conditions, and uncertain policy trajectories.
Domestic Economic Developments
Turning to the domestic scene, Kganyago noted South Africa’s slow economic growth but a recovery in employment. “As of the first quarter of this year, total employment surpassed its 2019 level. Nonetheless, job creation has been too slow, leaving the unemployment rate elevated at 32.9% in the first quarter of this year,” he said.
The South African economy grew by only 0.7% in 2023, down from 1.9% in 2022, significantly lagging behind peer emerging markets. “Load shedding and logistical challenges have been weighing heavily on economic activity, depressing the credit appetite of businesses and the spending of households,” Kganyago explained.
However, there is hope on the horizon as energy and logistical constraints ease. The domestic economy is expected to grow by 1.1% this year, rising to 1.7% by 2026, driven by stronger household spending and investment.
Domestic Inflation Dynamics
South Africa’s headline inflation has moderated over the past year, dropping from 6.9% in 2022 to an average of 6% in 2023. Kganyago noted, “These annual averages, however, hide the ongoing volatility in the underlying components of inflation, demonstrating the risks and uncertainty marking the disinflation path.”
Since September last year, headline inflation has fluctuated between 5% and 6%, influenced by fuel, food, and services prices. Core inflation saw a brief rise to 5% in February due to increased medical insurance costs but has since eased to 4.5% as of June.
The SARB projects core inflation to average 4.6% this year, down from 4.8% last year. While inflation expectations have eased, they remain above the midpoint of the target band. “Our current forecast shows headline inflation easing to 4.9% this year, pulled lower mainly by softening food and fuel inflation, and resting at the midpoint in 2025 and 2026,” Kganyago said.
The Monetary Policy Committee has maintained the repo rate at 8.25%, a level set in May 2023, to manage inflation risks effectively.
_______________________________________
Download Here:
Read all our publications on magzter:
https://www.magzter.com/ZA/Central-News-Pty-Ltd/Central-News/Newspaper/All-Issues
________________________
Central News also offers Sponsored Editorial Content, Podcasts , Radio / Social Media Simulcast, Video Production , Live Streaming Services, Press Conferences, and Paid Interviews (Video/Audio) etc.
We guarantee exceptional exposure, reach, and engagement, with an excellent return on investment.
Advertisement:
To place your advert on our platforms (Print Newspaper or Digital Platforms) : Please email : sales@centralnews.co.za
For Business Related:
business@centralnews.co.za
Newsroom:
Send your Stories / Media Statements To: newsroom@centralnews.co.za
General Info:
info@centralnews.co.za
Office Administrator:
admin@centralnews.co.za
Whatsapp / Call: 081 495 5487
Website: https://www.centralnews.co.za
Social Media Platforms (@centralnewsza) : Linkedin, Facebook, Tiktok, Twitter, Instagram, Youtube
#centralnewsza #news #politics #business #sports #gauteng #freestate #southafrica