The economy is projected to pick up as exports benefit from a weaker rand and strengthening world trade growth. Domestic demand is hampered by low confidence and slow income and employment growth, but should gradually pick up on the back of faster exports. Inflation is set to recede due to the substantial slack in the economy.
The government should implement further fiscal consolidation and use cyclical increases in revenues to reverse some of the recent increases in the public debt-to-GDP ratio. The supportive monetary policy stance should be continued as long as inflation remains contained and expectations anchored. Structural reforms to tackle the insider/outsider divide in the labour market and the sizeable rents in product markets would promote durable job creation and ease sector-specific supply constraints, unleashing the full potential of the economy.
Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.
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