SA recovery from recession ‘hesitant’, says Marcus

THE recovery in South Africa’s economy from a 2009 recession had remained hesitant and the outlook for growth this year was poor, providing a difficult backdrop for the Reserve Bank, governor Gill Marcus said yesterday.

The bank would maintain its focus price stability within a flexible inflation- targeting framework, Marcus reiterated in an introduction to its 2012/13 annual report.

“The economy is facing a difficult time as it is buffeted by both global and domestic challenges. The bank will play its part in trying to navigate the economy through these turbulent times,” she said.

A weaker rand and wage pressures had emerged as the main upside risks to inflation, Marcus said in the report, a largely backward-looking document that looks at the bank’s activities during the financial year ended March 2013.

The Reserve Bank has kept the benchmark repo rate on hold at four-decade lows of 5.0 percent since a 50 basis point cut in July last year aimed at boosting sluggish growth.

Bubbling inflationary pressures stemming from a sharp decline in the rand have prevented it from loosening policy any further.

The currency has fallen 18 percent against the dollar since the start of this year, weighed down by investor con- cerns about a wide current account deficit and the impact on the economy of often violent mining strikes.

More recently, the prospect of the US Federal Reserve winding up its bond- buying stimulus programme in the world’s biggest economy has also weighed on the South African currency. – Reuters