WASHINGTON – Good macroeconomic policies and a sound banking system mean South Africa’s economy is well positioned to resist external shocks and should keep growing five per cent a year, a senior International Monetary Fund official said on Sunday.
Saul Lizondo, the International Monetary Fund’s mission chief for South Africa, told Reuters the country’s economy had not suffered from the sharp markets sell-off that followed a downturn in global risk appetite last spring. But he warned the wide current account deficit and galloping credit growth were of concern.”We think South Africa has been managing its economic policies very well.We haven’t seen any adverse impact on the economy from the sharp (currency) depreciation in 2006,” Lizondo said.”We consider that the South African economy in general has several strengths in terms of absorbing external shocks.”Low external debt levels, the central bank’s growing reserves stockpile and the flexible exchange rate system, are factors in South Africa’s favour, he added.South Africa was one of the worst affected of emerging markets last year, forcing the central bank (SARB) to raise interest rates by a total two percentage points in an effort to cool sky-high private sector credit growth that is contributing to the current account deficit.But credit growth has stayed near record levels of 26,12 per cent in February, and Lizondo said the monetary tightening is also unlikely to dent gross domestic product (GDP) growth.SARB kept interest rates on hold last week and said the CPIX inflation measure will peak at 5,9 per cent, near the upper end of the three-six per cent band that the SARB targets.Nampa-ReutersBut he warned the wide current account deficit and galloping credit growth were of concern.”We think South Africa has been managing its economic policies very well.We haven’t seen any adverse impact on the economy from the sharp (currency) depreciation in 2006,” Lizondo said.”We consider that the South African economy in general has several strengths in terms of absorbing external shocks.”Low external debt levels, the central bank’s growing reserves stockpile and the flexible exchange rate system, are factors in South Africa’s favour, he added.South Africa was one of the worst affected of emerging markets last year, forcing the central bank (SARB) to raise interest rates by a total two percentage points in an effort to cool sky-high private sector credit growth that is contributing to the current account deficit.But credit growth has stayed near record levels of 26,12 per cent in February, and Lizondo said the monetary tightening is also unlikely to dent gross domestic product (GDP) growth.SARB kept interest rates on hold last week and said the CPIX inflation measure will peak at 5,9 per cent, near the upper end of the three-six per cent band that the SARB targets.Nampa-Reuters
Stay informed with The Namibian – your source for credible journalism. Get in-depth reporting and opinions for
only N$85 a month. Invest in journalism, invest in democracy –
Subscribe Now!