PRETORIA, Jan 17 (Reuters) - Below are comments from South African Reserve Bank (SARB) Governor Lesetja Kganyago on Thursday as he announced the central bank’s latest decision on its benchmark repo rate.
“The near-term inflation forecast generated by the SARB’s Quarterly Projection Model has improved significantly since the previous MPC.”
“The domestic growth outlook remains sluggish. Although GDP increased by 2.2 percent in the third quarter of 2018, private sector fixed investment remains weak and production in key sectors is volatile.
“The negative output gap is expected to close in the first quarter of 2021.
“Household consumption expenditure remains constrained by weak employment growth. Over the forecast period, consumption expenditure growth is expected to remain around 2 percent, on the back of moderate increases in real wages and household disposable income.
“Global growth is expected to remain broadly favourable over the near term, but to moderate over the medium term while risks are tilted to the downside.
“Since November 2018, international developments have been the major contributor to an improved inflation outlook. Significant declines in international oil prices and a less depreciated exchange rate have been key drivers of this improved outlook.
“The economy’s recovery from the technical recession in the first half of 2018 is welcomed, but it remains modest, with growth constrained by subdued demand as a result of weaker levels of consumer and business confidence.”
“The rand remains sensitive to domestic growth prospects, political developments and policy settings.”
Reporting by Alexander Winning and Emma Rumney Editing by James Macharia