69519
South Africa Warned of Deeper Recession
World Economy

South Africa Warned of Deeper Recession

South African Reserve Bank Governor Lesetja Kganyago on Tuesday warned that the country’s economic recession could deepen unless there was policy certainty on mining and agriculture, the two sectors that contributed to growth in the first quarter.
“At the moment these two sectors are facing policy uncertainty, which means we can go into an even deeper recession unless certainty is restored, African News Agency reported.
“The sooner the policy is clear the better it will be for our socio-economic well-being,” Kganyago told parliament’s standing committee on finance in a briefing on the role of the bank and the outlook for the economy.
He said a mining company could not be expected to make a 30-year investment if policy changed every time a new minister was appointed in the portfolio. “Ditto is you are a farmer and you must worry about the long-term. The same if you are a factory owner.”
Kganyago noted that South Africa and Venezuela were the only large economies currently in recession in spite of an upswing in the world economy. It meant that South Africa’s woes could not merely be blamed on the global economic climate but pointed to problems that were specific to the country. “Our problems are idiosyncratic,” he said.
He said it was too early to tell whether the recent downgrades of the country’s credit to junk would push the economy into a recession. “It’s too early to tell if we are in a recession,” Kganyago said at the regulator’s Monetary Policy Review on Monday.
“The environment is pretty fluid ... With the downgrades, we expect the cost of capital to rise and that rising cost of capital could force businesses that wanted to invest to rethink some of their projects. That will have an impact on growth,” he said.
Kganyago said he is confident that South Africa’s economic growth is likely to resume in the second quarter of 2017.
The last quarter of 2016 and the first quarter of 2017 showed contraction in the economy, which pushed the economy into a recession.
“We believe that the worst is behind us and that growth in the second quarter of this year will be positive,” Kganyago said.
The last two consecutive quarters pushed the country into a technical recession—the first in eight years—which exerted pressure on a government grappling with corruption allegations and credit rating cuts.
Kganyago said the past year had seen the worst domestic growth performance since the recession during the global financial crisis. The economy grew at a paltry 0.3% last year and recently recorded two consecutive quarters of negative growth.

Short URL : https://goo.gl/yxNdNU
  1. https://goo.gl/wN4Xrg
  • https://goo.gl/XxPtrg
  • https://goo.gl/r6Rq2Y
  • https://goo.gl/6Pzwp1
  • https://goo.gl/VDRDnx

You can also read ...

Shifting transactions from cash to digital payments holds great promise for  individuals, businesses and governments.
More than 23% of the world's economy operates out of sight of...
Federal Reserve Board Chairman Jerome Powell speaks during a hearing before the Senate Banking, Housing and Urban Affairs Committee.
US Federal Reserve Chairman Jerome Powell said protectionism...
India Launches 888 Anti-Dumping Probes
The Indian government has initiated as many as 214 anti-...
Fitch Retains Philippine  Debt Rating
Global debt watcher Fitch Ratings kept the Philippines’...
The warnings come amid a period of financial uncertainty for the world.
US officials who helped the country survive the 2008 financial...
EU to Fine Google $5 Billion
Google will be fined about €4.3 billion ($5 billion) by the...
Africa Next Frontier for Crypto
Cryptocurrency is not bound by geography because it is...
UN to Help Rebuild Gaza Economy, Create Jobs
Against the backdrop of rapidly rising tension, violence,...

Add new comment

Read our comment policy before posting your viewpoints

Trending

Googleplus