Reserve Bank forecasts contraction in GDP

SARB building
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The South African Reserve Bank is forecasting another contraction in GDP in the first quarter of this year largely due to electricity supply constraints and a strike in the gold mining sector.

The Bank has again lowered its 2019 growth forecast from 1.3% to 1%.

The Bank’s governor, Lesetja Kganyago, has raised concerns about the impact of the higher international oil prices and electricity supply constraints on inflation.

On Thursday, the Bank’s Monetary Policy Committee left the repo rate unchanged at 6.75%.

Kganyago said the Bank expects to cut the repo rate next year.

“The implied path of policy rates generated by the quarterly projection model is for one cut of 15 basis points to the repo rate by the end of first quarter of 2020. As emphasised previously, there remains a guide which could change from meeting to meeting in response to new development and changing risks,” says Kganyago.

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