No doubt South African economy is getting back to its feet, but Deputy Reserve Bank Governor Daniel Mminele said the flat-lining growth won’t solve the country’s economic problems.
Speaking at a financial conference, Mminele agreed that the growth for SA economy was in progress but pointed out that the steady increase of unemployment, poverty and student unrest amid political unrest within the ruling African National Congress (ANC) would not help solve the SA problem.
The deputy governor also noted that corruption within the SA government, as well as the alleged state capture, contributes to the clutches holding back the much needed economic reforms.
Mminele went on to alert government on the need to stabilize policies to reassure investors adding that problems faced by most Africa’s industrialized economies have to be fixed so as to reassure investors
“Clearly, the growth rates that were seeing… are woefully inadequate to address the challenges we have as a country,” Mminele said, adding that policy certainty and business-friendly measures were needed to encourage investment.
The deputy also told the financial conference that the Reserve Bank is close to ending its monetary policy tightening cycle but that the bar for cutting interest rates remains high,
Meanwhile, the BankservAfrica disposable salary index reveals that increasing number of South African workers still take home much smaller disposable salaries than they did last year.
In its latest release, the BankservAfrica revealed that employees took home 2.5% less in August than a year earlier — the third consecutive month of declines in real disposable salaries.
“While workers received salary increases in nominal terms, the real value for these ended up being lower due to the higher rate of inflation,” BankservAfrica head of knowledge and risk services Caroline Belrose said.
Inflation was 4.6% year on year in August 2015 and had accelerated to 5.9% year on year by August.
The SA reserve bank, however, expects inflation to average 6.4 percent in 2016, slightly down from an earlier forecast of 6.6 percent. The target range is 3-6 percent and inflation now stands at 5.9 percent.
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The bank last week kept interest rates unchanged at 7 percent for a third consecutive meeting, revising its growth outlook up to 0.4 percent from zero percent.