The last quarter of 2016 and the first quarter of 2017 showed contraction in the economy, which pushed the economy into a recession.
“We believe that the worst is behind us and that growth in the second quarter of this year will be positive,” Kganyago said at the bank’s annual general meeting.
The last two consecutive quarters pushed the country into a technical recession - the first in eight years - which exerted pressure on a government grappling with corruption allegations and credit rating cuts.
Kganyago said the past year had seen the worst domestic growth performance since the recession during the global financial crisis. The economy grew at a paltry 0.3percent last year and recently recorded two consecutive quarters of negative growth.
“The SA Reserve Bank had expected the fourth quarter of 2016 to be the low point in the cycle, but growth in the first quarter of this year surprised significantly on the downside at -0.7 percent.
“This contraction was broad-based, with only the primary sector recording positive growth,” Kganyago said. However, the Reserve Bank’s growth forecast was revised down significantly, as communicated at the recent meeting of the monetary policy committee.
“Growth of just 0.5 percent is now forecast for this year, rising to 1.3 percent and 1.5 percent respectively, in the next two years. This is clearly too low to make any meaningful inroads on unemployment,” Kganyago pointed out.
The International Monetary Fund has also revised South Africa’s economy forecast and predicated that it would grow by 1 percent in 2017.
The Reserve Bank emphasised that although the economy had been in a recession, it was expected to recover in the latter part of this year.
Kganyago also addressed the issue raised about the mandate of the Reserve Bank .
Public protector Busisiwe Mkhwebane said in June that the Reserve Bank ’s primary role must no longer be about protecting the value of the currency but it should be about promoting economic growth and protecting the socio-economic wellbeing of its citizens.
“Our constitution is clear on this too: in carrying out its mandate, the Reserve Bank must not bow to any pressure, be it political or from the private sector.
“Price stability or the protection of the value of the currency is a core function of central banks. I know of no central bank that does not have this mandate,” he said.
Despite the challenging environment in which the Reserve Bank operates as an institution “it remains strong”.
“It is staffed by people who are committed to the promotion of the economic well-being of all South Africans,” he said.