Fin24

Marcus: EU woes trouble SA

2010-12-08 12:59

Pretoria - Fiscal austerity programmes in Europe have the potential to derail economic recovery in other regions and are of particular concern because of South Africa's close trading ties with that area, Reserve Bank Governor Gill Marcus said on Wednesday.

In a speech to the bank's shareholders, Marcus also said it was committed to pursuing its objective of price stability within a flexible inflation targeting framework.

"Not only because of their potential to derail the recovery in other regions, but also because of South Africa's close and significant trading relationship with Europe," she said.

Weaker than expected economic data coming from the US as well as sovereign debt problems in the eurozone have been a concern for markets.

The International Monetary Fund expects growth to remain subdued in the developed world, while emerging market economies are forecast to achieve higher growth.

Marcus said South Africa's "growth is expected to average below 3% in 2010".

Although household consumption expenditure is showing signs of recovery, growth in private sector gross fixed capital formation remains "extremely subdued", she said.

The bank's objective of price stability was also highlighted.

Marcus said the bank remained committed to pursuing its objective of price stability within a flexible inflation targeting framework, in the interest of balanced and sustainable economic growth and employment in South Africa.