Lesetja Kganyago: South Africa's macroeconomic adjustment and monetary policy

Address by Mr Lesetja Kganyago, Governor of the South African Reserve Bank, at the 5th SA Tomorrow Investor Conference, New York City, 9 November 2017.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Good morning, ladies and gentlemen.

Thank you for the opportunity to address this important conference today.

As many of you will know, the South African economy faces some major challenges. Economic growth is weak and unemployment remains high despite favourable terms of trade and a robust global recovery. We have good ideas for addressing these problems, but regulatory and policy uncertainty as well as corruption and a lack of direction in some areas have all sapped consumer and investor confidence and weakened private-sector investment. It should not be a difficult task to turn things around. Setting out some investment-friendly ambitions for the economy and reducing political uncertainty would go a long way towards boosting confidence. As is often said, raising confidence is the cheapest form of stimulus.

Given the economy's poor performance, there is an understandable focus on the negatives - but we should not forget that there are also positives. I will touch on these during my address today, particularly on those that impact directly on the work of the South African Reserve Bank (or SARB). These include a much smaller current account deficit, which has made the rand more resilient to risks. There has also been some moderation in inflation, which has eased the near-term pressure on monetary policy. Given our enhanced focus on keeping inflation expectations low, this could extend well into the future.