Representatives of the South African Reserve Bank (SARB) conducted its six-monthly Monetary Policy Forum (MPF) on the country’s economic climate in the city on Tuesday.
The SARB uses several channels to communicate with and create a better understanding of the country’s monetary policy among its stakeholders which includes the public. The MPFs are convened in each province twice a year where a panel of senior SARB officials present recent and domestic and international developments that have impacted on inflation and motivate the rationale behind the SARB’s monetary policy stance.
Kuben Naidoo, Deputy Governor and Rudi Steinbach, Senior Economist of the SARB, represented the Bank and discussed the inflation outlook, the factors impacting on it as well as the Bank’s inflation and economic growth forecasts.
Local Consulting Economist Glen Steyn attended the event and commented that it was evident from the presentation that economic growth is slowing down globally, as well as in South Africa. “Debt levels are rising in China, which suggests that future economic growth may also slow down in that country. South Africa’s economic growth is projected to be only 0.8% for 2016, which is lower than the population growth rate and on average, all people in the country will therefore be poorer by the end of the year,” Steyn commented and added that inflation is a major concern and that it is expected to remain above the upper band of the inflation target range until 2017. Inflation is driven by the weaker Rand, by higher administered prices such as electricity, by unit labour costs that are above productivity improvements and by higher food prices. Imports remain very high despite the weaker Rand.
According to Steyn the risk of an international credit rating downgrade for the country is looming. This will increase the cost of public debt and reduce available funds held by Government to promote development and improve living conditions.
“Consumers and citizens can contribute towards improving the current undesirable situation by avoiding debt where possible, by buying locally produced goods and by using water and electricity as sparingly as they can.
If you have green fingers, then you may even consider planting vegetables in your back garden, especially if you can harvest some rain water for that purpose,” is Steyn’s advice.
Story: BARRY VILJOEN
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Featured photo: Kuben Naidoo, Deputy Governor and Rudi Steinbach, Senior Economist of the South African Reserve Bank (SARB) at the April 2016 Monetary Policy Review.
