Lesetja Kganyago: Overview of the South African economy

Address by Mr Lesetja Kganyago, Governor of the South African Reserve Bank, to the ninety-ninth annual ordinary general meeting of the SARB shareholders, Pretoria, 26 July 2019.

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

Central bank speech  | 
29 July 2019

Global economic conditions

The past year began with significant challenges for emerging markets, including South Africa. In contrast to the synchronised pickup in economic growth of 2017, which had surprised most observers by its magnitude, the major economies began to display divergent growth patterns in 2018. While the United States (US) maintained a strong pace of growth amid a sizable fiscal stimulus and a buoyant labour market, the eurozone and Japan lost some momentum. Chinese demand felt the negative impact of earlier monetary and regulatory tightening. Growth in world trade volumes also began to slow, a move that was exacerbated by a flare-up in trade tensions as the US slapped tariff increases on certain imports.

This confluence of factors, together with negative current account and price developments in countries like Argentina and Turkey, resulted in downward pressure on emerging market currencies and fixed-income assets.