South African Reserve Bank (SARB) Governor, Lesetja Kganyago says that with real rates moving higher in advanced economies, South Africa and other emerging economies need to work harder to attract capital.
Kganyago notes that while yearly rates of inflation have peaked in most economies, the latest readings in major countries show stronger short-term momentum in consumer prices. He made these assertions while delivering a keynote at the Peterson Institute for International Economics (PIIE) on the sidelines of the World Bank and International Monetary Fund (IMF) Spring Meetings currently under way in Washington DC.
Meanwhile, the IMF’s World Economic Outlook report projects South Africa’s growth as among the lowest in the world at 0.1% in 2023.
“With the rise in debt created by our efforts to confront weakening growth and failures of state enterprises, there is little chance of improving credit quality without new rules and more strategic use of macroeconomic policy,” says Kganyago.
“A major benefit to fiscal policy and to stronger growth would be the implementation of a revised inflation target in South Africa. A lower target, sitting at 3%, would help dampen exchange rate volatility and sovereign risk, reduce the potential for upward drift in the real exchange rate, and materially lower debt service costs, primarily for the now over-indebted public sector,” he added.
— Peterson Institute (@PIIE) April 9, 2023
SA Reserve Bank Governor @KganyagoLesetja delivered a keynote address titled ‘Globalised stagflation & the emerging market response’ at the Peterson Institute for International Economics annual event in Washington. To read the full speech, click here: https://t.co/R0WnWaD3Vy pic.twitter.com/2kUoK9Kuk1
— SA Reserve Bank (@SAReserveBank) April 12, 2023