Johannesburg - Joblessness in South Africa would remain high as growth and confidence in the economy remains weak, the Reserve Bank said.
“With household consumption expenditure and investment growth expected to slow amid weak business confidence, the bank has lowered its growth forecast for 2014 to 2.1 percent,” the central bank said in its annual report released in Pretoria today.
“Under these circumstances, the high level of unemployment is expected to persist.”
Unemployment in South Africa’s economy rose to 25.2 percent in the three months through March as the economy contracted by 0.6 percent due to a strike at platinum mines.
Inflation accelerated to 6.6 percent in May, increasing pressure on the Reserve Bank to raise its benchmark repurchase rate to bring consumer price growth back to within the target range of 3 percent to 6 percent.
‘‘Given the global and domestic risk to the outlook, future changes in the monetary policy stance will remain highly data dependent,’’ the Reserve Bank said today.
‘‘The MPC will remain focused on its core mandate of price stability, but will also be mindful of the impact of its policy actions on economic growth.’’
The rand has lost 1.2 percent against the dollar this year.
The currency gained 0.3 percent to 10.6158 per dollar as of 9:55 a.m. in Johannesburg today.
The bank has left interest rates unchanged at the last two meetings of the monetary policy committee.
Borrowing costs will have to increase in due course as the risks to inflation are mounting, Deputy Governor Daniel Mminele said yesterday.
‘‘Many of the problems the country faces are not part of the bank’s mandate, nor does the bank have the policy levers to address these issues,’’ the central bank said.
‘‘However, the bank will continue to play its part in supporting the economy.’’ - Bloomberg News