The South African Reserve Bank (SARB) has revised its growth forecast from 0% to 0.4%, governor Lesetja Kganyago announced yesterday. Following the Monetary Policy Committee (MPC) meeting in Pretoria, Kganyago said that the bank would pause the rate hike, which is currently at 7%. This was in line with market expectations. He added that although economic growth showed improvements in the second quarter of the year, the outlook remains constrained for the next two years.
This is due to weak domestic investment and low levels of business and consumer confidence. The forecasts for the next two years have increased by 0.1 base percentage points to 1.2% for 2017 and 1.6% for 2018. “While the second quarter growth performance was more favorable, data from July suggest that this improvement is unlikely to be sustained for the third quarter,” he said. Mining and manufacturing sectors reported negative month to month growth rates in July, he explained.
Parallel to these developments the Producer Price Inflation has slowed from an annual 7.4% down to 7.2%.