Economics
South African Rate Cuts No Sure Thing Even as Economy Contracts
- GDP contraction may reduce potential growth, Kganyago says
- Price stability is necessary for sustainable growth: governor
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South Africa’s deepest quarterly economic contraction in a decade won’t automatically move the Reserve Bank to cut its key interest rate because this may drag down the country’s potential growth rate.
The difference between potential growth and actual expansion is one of the four elements in the central bank’s quarterly projection model. This gap has largely been negative since 2014 and won’t close in the next two years, according to central bank forecasts.