As a result of ‘extensive load shedding and other logistical constraints’, the SA Reserve Bank has revised its forecast for GDP growth to only 0.3%, the bank’s Lesetja Kganyago said.
“We are already at high levels of interest rates. They could have been punitive with an increase of 50 basis points, but by choosing smaller increments, it buys the ability to do something to address inflation without harming the economy.”
Over the medium term, the forecast takes into account continuing high levels of blackouts, and more modest household spending and investment growth than previously. In nominal terms, these costs are estimated at up to R1.2-million for Stages 1 and 2, and between R204-million and R899-million for Stages 3 to 6 when continued on a 24-hour basis on weekdays.Kganyago added that a material reduction in blackouts would significantly raise growth.
Looking ahead, Kganyago said the Reserve Bank’s forecast of headline inflation for 2023 was unchanged at 5.4% and slightly higher at 4.8% for 2024. Mamello Matikinca-Ngwenya, FNB’s chief economist, points out that the lower-than-expected increase emphasised the importance of improved risk sentiment, softening price pressures and an unfolding global economic slowdown.
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