The Reserve Bank is not given to alarmist rhetoric, so when it lays out the potentially dire consequences for the economy and financial system of the government’s flirtation with Russia, its warnings should be taken seriously.
Economists are starkly divided on why the rand weakened further. Was the market disappointed that the Bank wasn’t hawkish enough? Or did it view the hike as too hawkish, a monetary policy error that will tip the economy into a recession? Certainly, there seems to be a growing realisation that the only way to get inflation down, and growth up, is for the government to repair the country’s basic fundamentals — from collapsing water and energy infrastructure to the teetering logistics system. While it’s at it, it should postpone the Brics summit indefinitely.
While the overall financial system remains “resilient” for now, this is likely to be tested by even slower and more inequitable economic growth down the line, the Bank warns. South Africa’s greylisting by the Financial Action Task Force and interminable load-shedding are not helping.
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EDITORIAL: Economy skates on the thinnest ice as SA’s Russia romance continuesThe Reserve Bank has laid out in stark terms the risks the economy and financial system face if the ANC continues its flirtation with Vladimir Putin’s Russia
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