Kganyago: SA reforms, global resilience drive growth
South African Reserve Bank Governor Lesetja Kganyago highlighted global economic resilience and South Africa's reform progress in his address to foreign missions. He noted persistent global challenges alongside domestic improvements and a new inflation target.
Decades in weeks: Global shifts
Governor Kganyago reflected on a period of intense global change since 2019, citing a global pandemic, intensifying conflicts, and two waves of inflation.
Despite these challenges, the global economy has shown surprising resilience.
This strength is attributed to the AI boom, which has boosted investment and trade, loose fiscal policies in major economies, and maintained openness to trade.
Crucially, emerging markets have demonstrated significant resilience, growing at close to 4% on average and now accounting for over 60% of world output.
This makes them a powerful engine for global growth, counterbalancing persistent threats like the erosion of multilateralism and attacks on central bank independence, which remain as pressing as ever.
South Africa's rollercoaster recovery
South Africa experienced a 'rollercoaster ride' since 2019, facing COVID-19 misery and domestic shocks like load-shedding in 2022–23. Encouragingly, the past two years brought credit upgrades, a positive Moody's outlook, and an exit from the FATF greylist.
Growth has steadied with six consecutive quarters of expansion, the longest since 2018.
Network sectors stabilised, load-shedding ended in 2024, and the Durban port significantly improved.
Fiscal stability advanced, with sovereign debt expected to stabilise this year.
The SARB also adopted a new, narrower inflation target of 3%, a reform deemed 'better late than never'.
Fragile gains, persistent vigilance
South Africa's recent progress, while encouraging, remains vulnerable to external shocks and persistent global fragmentation.
The new 3% inflation target is a crucial step for credibility, yet recent rate hikes underscore the ongoing battle against imported price pressures.
Sustained growth hinges on continued domestic reforms and a more stable international environment, demanding persistent vigilance from policymakers.