* Lagarde asks S.Africa to check wage growth
* Says should maintain supportive policy
BLOEMFONTEIN, South Africa Jan 7 (Reuters) – The euro
zone crisis could hurt South Africa’s economy and the country
should maintain a supportive monetary policy to ensure growth in
the medium term, the head of the International Monetary Fund
said on Saturday.
Christine Lagarde, in South Africa as part of her first tour
of the continent since taking the IMF post, said the African
economic powerhouse would do well to also moderate wage growth.
Although well integrated into the global economy, South
Africa mitigated the worst impact of 2008’s recession through a
sound macroeconomic regime, a strong financial sector and a
flexible exchange rate, she said.
“The ongoing difficulties in the euro area, one of South
Africa’s main export markets, present significant downside risks
to the economic outlook,” Lagarde said in a statement after
meetings with President Jacob Zuma and senior officials.
“In this context, we agreed that the challenge now is to
ensure that monetary policy remains supportive and
competitiveness improves.”
The country has lost about a million jobs in the past two
years, positions analysts say will be difficult to reopen
because unions have priced labour out of the market.
The average factory worker in South Africa earns about six
times as much as a factory worker in China and is less
efficient.
South Africa, along other emerging markets, is bearing the
brunt of global risk aversion triggered by the euro zone crisis.
Its rand currency fell nearly 23 percent against the
dollar in 2011.
(Writing by Helen Nyambura-Mwaura)
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