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Economic growth is projected to pick up slowly in 2019-20, driven by exports. Private consumption will also expand as wages increase moderately. Unemployment will remain high, however, weighing on demand and confidence. Investment is set to recover as policy uncertainty is assumed to ease gradually. High oil prices and the weak currency will drive inflation to the upper part of the 3-6% target range.
Monetary policy will need to address upward pressures on inflation while growth is low. It should remain accommodative to support growth, but tighten moderately in case inflation continues to rise. The government budget deficit is set to remain high relative to GDP. Credible structural policy reforms are necessary to broaden competition and economic opportunities in order to support growth.
Source: OECD Economic Outlook 104 database; and Statistics South Africa.
Economic Survey of South Africa (survey page)