The South African Reserve Bank (Sarb) has revised its GDP growth forecast downwards for 2016, from 0.8% to 0.6%, noting that the domestic economic growth outlook remains weak.<\/p>\n
“While a recovery is still expected in the next two years, the forecasts for both
\nthese years have been revised down by 0.1 percentage point to 1.3% and 1.7%,” said Reserve Bank Governor, Lesetja Kganyago, of the outlook for 2017 and 2018.<\/p>\n
“While the Bank\u2019s forecast for GDP growth in the quarter is barely positive, it does represent the low point of the forecast, and a slow upward trend is expected going\u00a0 forward,”\u00a0Kganyago said.<\/p>\n
He said that the economic slow down is also reflected in labour market trends, with the unemployment rate rising to 26.7% in the first quarter of 2016, from 26.4% year\u00a0 earlier.<\/p>\n
The\u00a0Sarb left its benchmark repo rate unchanged at 7.0% on Thursday, while lending rates remain at 10.5%.<\/p>\n
Kganyago said that inflation is now expected to average 6.7% in 2016, compared with\u00a0 6.6% previously.\u00a0 In 2017 and 2018 inflation is expected to average 6.2% and 5.4%, marginally down from the previous forecast.<\/p>\n
The expected peak, at 7.3% in the fourth quarter of 2016, is unchanged, SARB said.<\/p>\n
The forecast for core inflation is slightly improved, with a lower forecast for 2016 of 5.9% from 6.2% previously. Forecasts for 2017 and 2018 are unchanged at 5.7% and 5.2%, the Bank said.<\/p>\n
Reserve Bank leaves repo rate unchanged at 7%<\/strong><\/a><\/p>\n