|In the first half of 2014, the economy slowed and inflation rose, before growth rebounded as widespread labour unrest came to an end. Growth is projected to pick up in 2015 and 2016 as exports recover on the back of a weak rand and firmer world trade growth. Private consumption will recover slowly in line with real incomes, while private investment will be held back by low capacity utilisation. The economic slack should contain inflation within the Reserve Bank’s target range.
Continued mild fiscal consolidation will be insufficient to prevent further increases in public debt. The monetary policy stance should tighten further if inflationary pressures fail to abate. Structural reforms to facilitate entry into markets dominated by state-owned enterprises are needed to remove energy and transport infrastructure bottlenecks and stimulate firm creation. Labour market reforms should aim at tackling high structural unemployment and secure less confrontational labour relations.
Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.
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