SA caught in low-growth trap - TechCentral

SA caught in low-growth trap

Lesetja Kganyago

Lesetja Kganyago

South Africa’s economy is in a low-growth trap and the central bank is unable to assist its recovery, according to governor Lesetja Kganyago.

“We are concerned about what has been happening with the growth outlook,” Kganyago said in a interview with Bloomberg TV at the Group of 20 meetings in Chengdu, China, on Saturday.

“The slowdown in the economy has nothing to do with technical factors that have to be dealt with by monetary policy. The slowdown in growth has to do with structural impediments.”

The Reserve Bank’s Monetary Policy Committee left the benchmark repurchase rate unchanged at 7% on 21 July as it slashed its 2016 growth forecast for Africa’s most industrialised economy to 0%.

The nation’s economic outlook has deteriorated due to weak export demand, the worst drought in more than a century, low commodity prices, and most recently, the UK’s vote to quit the European Union. The MPC raised the key rate by 125 basis points since last July to steer inflation back toward its 3-6% target band.

The rand has strengthened by 8% against the dollar this year after losing 26% of its value in 2015.

Inflation below forecasts gave the central bank room to pause its interest rate increase cycle, Kganyago said.

While price growth could surprise to the downside if the rand sustains its recent strength, the central bank stands ready to act on interest rates if necessary, he said.

Inflation quickened to 6,3% in June and will probably return to the target band in the third quarter of next year, according to central bank forecasts.

If a high inflation rate becomes the norm, observers may think the central bank is happy to tolerate price growth outside the target range, Kganyago said.  — (c) 2016 Bloomberg LP


  1. This side of X. on

    It is bad when the lies just continue and continue.
    Here we have the blame for South Africa’s slow growth being blamed on everything except the truth.
    Brett’, drought, week export, and, and…… ‘structural impediments?

    “The slowdown in the economy has nothing to do with technical factors that have to be dealt with by monetary policy. The slowdown in growth has to do with structural impediments.”

    Is Mr. Kganyago pointing towards the truth here? Maybe, but can’t come out and say it openly?

    Well let it be said. The fact is that South Africa has been led into this trap by the ANC. Period.
    Regardless of what is happening in the world, be it Brexit’, droughts, or another eventuality, if the ‘structural technical factors’ were not impediments as he here claims, then, all things could have been an opportunity for South Africa to power ahead and grow.

    The ANC government, including parliament and it’s opposition are useless, a massive impediment to the citizens of the South African nation. The structural institutions have technically become a soap opera with a bad script. incapable, inconsistent, parrisyitacal in every manner and a massive burden on South African society.
    The ANC and the technical structures of South African governance are unable, incapable, irrelevant, inexperience, undereducated totally outplayed and outgunned in every factor of negotiation on the international political arena.

    They are fundamentally beggars with their poster signs hanging around their necks at the traffic intersections pertaining to racial idealism and self-hating punishments expecting gifts for past historical impart’

    While the game has moved on and the business is based on numbers in todays hours and minutes,
    it would be beneficial to all South African’s to ignore the political priesthood, a parasitical pasterhood which every individual in our South African society much more than what they have ever delivered.

  2. Do the right thing on

    Growth will not place unless you open the market to all citizens of SA , do away with BEE , EE and all the other racists barriers that restrict minorities from playing.

  3. It would be interesting to know how many so-called financial planners foresaw this catastrophe and advised their retired and pensioner clients that it was more important to be concerned as to the return of their capital than the return on their capital?
    Although I’m not a FP I for one DID see this 0% growth Asteroid Strike approaching and well before 1994, that’s for sure.

  4. Mr Zuma & cronies are the “the structual impediment”. Are we going to leave it until it’s too late? Every day we wait for necessary change, reversing the destruction gets worse – ‘momentum’ is a powerful thing. SA’s momentum is downhill. The 3rd must be the first step for a new us.

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