Wednesday afternoon saw Reserve Bank Governor Lesetja Kganyago deliver a Distinguished Special Lecture at the University of Johannesburg under the heading, “Challenges facing the global economy: A South African Perspective”.
Kganyago offered a unique perspective on the challenges facing the global economy from a South African point of view. He shared his insights on the current state of the global economy, the impact of the pandemic and the role of South Africa in the global economic landscape.
The lecture was attended by executives of the university’s College of Business and Economics, students and members of the media.
It was a must-watch for anyone interested in understanding the complex issues facing the world economy today and it gave listeners an opportunity to gain valuable insights from one of the world's leading economic thinkers.
“While the global economy at large continues to recover from the Covid-19 shock, and as we navigate what one could consider a new normal, there are important challenges that we continue to face as policymakers across the world,” he said.
He said the topic was particularly important for South Africa which, alongside other emerging market economies, has had its own idiosyncratic challenges being exacerbated by these global shocks. He focused on how inflation, growth and the monetary policy outlook have impacted our domestic economy.
Kganyago said load shedding was now expected to add 0.5 percentage points to headline inflation in 2023. He said the SARB estimated that load shedding alone would reduce GDP growth by 2% this year.
He reiterated the central bank’s prediction that the country’s energy crisis would shave off two percentage points from growth this year.
“In addition to the initial studies on the impact of load shedding on growth, there is recognition and growing evidence that the country’s ongoing energy supply challenges are impacting prices as well,” he said.
Looking ahead, Kganyago said, domestic headline inflation was projected to remain elevated, returning to the target range in the third quarter of 2023 and averaging 6% for the year.
A more pronounced moderation in inflationary pressures was only expected in the latter years of the forecast horizon, with headline inflation projected to average 4.9% in 2024, before reaching the midpoint of the target range only in 2025.
The governor said the 0.2% economic growth forecast for this year, and the projected average of 1% in the following two years “is barely an expansion”.
“This is a reflection of the headwinds that the domestic economy continues to face. The ongoing infrastructure challenges, especially for electricity, continue to impose a hard constraint on growth,” he added.