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.

Central bank speech  | 
05 March 2020
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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.