Lesetja Kganyago: Sound policy is an imperative for growth
Public lecture by Mr Lesetja Kganyago, Governor of the South African Reserve Bank, at the University of the Free State, Bloemfontein, 4 March 2020.
The views expressed in this speech are those of the speaker and not the view of the BIS.
Good evening, ladies and gentlemen.
Thank you for inviting me here today to speak about the South African economy.
I am going to focus on how we should see macroeconomic policy and its role in our economic growth problem.
There is a principle in economics, known as Dornbusch's Rule, that a crisis takes longer to happen than you expect, but then occurs faster than you can believe. It is the macroeconomic version of the old rule about how you go bankrupt: slowly, then quickly. The point is that you get a lot of bad data before the system breaks. Experts will warn about a crisis, and after a while, these warnings will become part of the background noise. But when the crisis comes, its timing will still surprise everyone.
In South Africa, we are getting used to talking about a crisis.