Lesetja Kganyago: Overview of the South African economy

Address by Mr Lesetja Kganyago, Governor of the South African Reserve Bank, to the ninety-eighth annual ordinary general meeting of the SARB shareholders, Pretoria, 27 July 2018.

This past year was, to some extent, one of contrasting halves. The second half of 2017 saw a generally constructive global backdrop for South Africa and other emerging markets. The recovery in the advanced economies continued at a steady pace, with most showing signs of sustained growth. In the United States (US), growth was above the estimated potential, and unemployment continued to decline. Economic activity in the euro area surprised on the upside after a protracted period of sluggish growth. A notable exception to this trend was the United Kingdom, where growth prospects were adversely affected by the uncertainty arising from the decision to leave the European Union.

There were also indications that, while the withdrawal of monetary policy stimulus was likely to continue in the advanced economies, the policy tightening cycle was expected to be moderate. These settings remained supportive of strong capital flows to emerging markets. Stronger demand underpinned higher commodity prices, reinforced by strong growth in China.