Unrest will have lasting effect on investor confidence & job creation, warns SARB
The South African Reserve Bank's Monetary Policy Committee says the recent unrest could have a lasting effect on investor confidence and job creation.
Governor Lesetja Kganyago says it would have negated the country's first quarter growth results, which resulted in an unchanged estimate of 4.2% this year.
He says the disruptions also affected Covid-19 recovery efforts.
"The direct and indirect costs of recent events will likely further slow South Africa’s economic recovery.
"Recent unrest and economic damage could have lasting effects on investor confidence and job creation. We estimate the unrest to have fully negated the better growth results from the first quarter, resulting in an unchanged estimate of 4.2% for growth in 2021.
"Although some sectors, notably mining and manufacturing have largely recovered to pre-pandemic levels, production remains muted in sectors harder hit by the pandemic and in regions now affected by the unrest."
The central bank’s investment forecast was revised up for this year but remains constrained. Household spending is still expected to be healthy, in line with better than expected salaries and wages, rising asset prices and low interest rates.
"GDP is expected to grow by 2.3% in 2022 and by 2.4% in 2023, unchanged since the May meeting."
During Thursday's media briefing, Kganyago also said the repo rate would be left unchanged at 3.5%.
