“The past year was a difficult one for emerging markets in general, and South Africa was no exception,” says Lesetja Kganyago, the governor of the South African Reserve Bank (SARB), pointing to the combination of higher US dollar interest rates, prospects for a reduction in the size of advanced economy central banks’ balance sheets, rising inflation pressures, and financial crises in countries such as Turkey and Argentina. “It was therefore difficult to distinguish, when looking at movements in South African financial assets, what reflected global issues and what directly stemmed from confidence in domestic fundamentals,” he says.
South Africa’s economy entered into a technical recession in the first half of 2018, confounding expectations of a recovery amid improving domestic confidence and strong global growth, and while gross domestic product (GDP) growth rebounded to 2.2% in the third quarter of 2018, domestic growth remains sluggish against a backdrop of weak private sector fixed investment and reduced confidence.
