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Marcus vows to support weak economy

Jul 25 2014 12:19
Reuters with Fin24

SA Reserve Bank governor Gill Marcus. (Supplied)

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Pretoria - The South African Reserve Bank (Sarb) will continue to support the economy through difficult times by focusing on price and financial stability, said governor Gill Marcus on Friday.

Marcus also said emerging markets faced a difficult year of depreciating currencies, volatile capital flows and rising inflation.

Last week Marcus, when announcing a 25 basis points repo rate hike in the wake of rising inflation and weak economic growth, warned that the monetary policy committee's (MPC's) mandate is not to grow the economy.

"We would like to reiterate that monetary policy should not be seen as the growth engine of the economy. The sources of the below par growth performance are largely outside the realms of monetary policy."

She said at the time that the economy's growth outlook deteriorated and was further impacted by ongoing labour unrest.

The Sarb also revised the GDP forecast to 1.7% compared to 2.1% previously. It revised inflation forecasts to 6.3% in 2014.

Marcus said the bank was worried about weak growth, widening output gap and the negative employment outlook; however she urged the implementation of reforms in order to boost growth.

"Given that the key headwinds preventing a return to trend growth are structural, there is an urgent need to implement necessary structural reforms, as envisaged in the National Development Plan, in order to achieve higher and more inclusive growth," she said at the time.

 - Reuters with Fin24

sarb  |  gill marcus  |  sa economy
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