|Economic activity is expected to be driven by faster export growth, reflecting depreciation of the rand and a pick-up in world trade growth. Domestic demand will be held back by continued weak confidence and modest growth in real incomes, but will slowly benefit from the stronger external sector. However, growth will not become strong enough to reduce the substantial negative output gap.
The government should continue to slowly tighten the fiscal stance as the economy recovers and use cyclical revenue increases to partly reverse recent public debt accumulation. Monetary policy was tightened in response to the continued weakening of the rand, but should remain supportive as inflation pressures are contained by economic slack. Potential growth should be boosted by structural reform that addresses the insider/outsider divide in the labour market and non-competitive product markets, securing faster job creation and more rapid responses to sector-specific supply constraints.
Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.
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