PRETORIA May 29 (Reuters) – The economic outlook for South
Africa remains modest, with a gradual recovery in domestic
demand and supply expected barring further global turbulence,
the Reserve Bank said on Tuesday.
Inflation expectations remain relatively well anchored, with
the main upside risk to the outlook emanating from the oil
price, administered prices and the rand exchange rate, the bank
said in its bi-annual monetary policy review.
“Increased uncertainty regarding Europe and associated
global financial market turbulence has impacted on the perceived
risks to the outlook for both domestic inflation and growth,” it
said.
“The probability of future growth and financial shocks
emerging from global developments remains high.”
While the inflation forecast appeared more favourable, there
were renewed risks from a possible further weakening of the
exchange rate, although this should be offset by weaker demand
and lower commodity prices, particularly oil.
“Cost-push pressures emanating from international oil prices
and the impact of changes in global risk perceptions on the
exchange rate remain the central unknowns,” the bank said.
(Reporting by Stella Mapenzauswa and Tshepo Tshabalala; Editing
by Ed Cropley)
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