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DURBAN, June 7 (Reuters) – Global economic developments
could hurt South Africa’s economic growth while the depreciation
of the rand poses an inflation risk, Reserve Bank Governor Gill
Marcus said on Thursday.
Marcus said in a speech at a National Union of Metalworkers
of South Africa congress the central bank was concerned about
weak output in the key manufacturing sector, which accounts for
about 15 percent of GDP.
The Bank sees economic expansion of 2.9 percent in 2012
compared to previous expectations of 3.0 percent, slightly
higher than the National Treasury’s prediction of 2.7 percent
growth this year.
“The risks to this forecast are to the downside, primarily a
result of the risks posed by global developments,” she said.
The Reserve Bank left its repo rate at a three-decade low of
5.5 percent last month, sounding a warning about the effects of
a bleak global outlook on the fragile domestic economy while
saying inflation was likely to moderate.
Marcus said the depreciation of the rand, largely
due to the euro zone debt crisis, posed the main risk to the
inflation outlook.
“However, there is not an automatic response of monetary
policy to the depreciation, as the focus of monetary policy is
not on the exchange rate per se, but rather on the overall
inflation rate over an appropriate time horizon,” she said.
(Reporting by Xola Potelwa; Writing by Stella Mapenzauswa)
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