Brifly discuss how the south african government addresses economic growth constraints
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Thursday, August 23, 2018
Government says it will continue to implement reforms to increase the growth potential of the economy and improve the credibility of South Africa’s policy decisions.
In addition to this, government will maintain South Africa’s strengths, such as an independent Central Bank, an inflation-targeting regime with inflation consistently within the target range, low levels of foreign-currency debt and a clear fiscal consolidation plan.
“Government will continue to collaborate with business, labour and civil society to restore confidence in the economy and address the structural constraints to economic growth,” Communications Minister Nomvula Mokonyane said on Thursday.
“Working together, we can translate our plans into concrete actions to move the South African economy forward,” the Minister told the media following the regular fortnightly briefing.
Cabinet’s comment follows the recent dramatic plummet of the Rand to the US Dollar - which saw the currency reach over R15 to the dollar – for the first time in two years.
This has been attributed to the external factors such as the recent economic developments in Turkey, which have led to a large depreciation of emerging market currencies, including the South African Rand.
The US imposed 20% tariffs on the Turkish Lira, which is threatening the banking system in the country. This rocked other emerging markets, raising questions of possible knock-on effects.
Mokonyane said capital outflows from these markets have accelerated and bond yields have risen, slowing down economic growth and job creation.
Turkey’s large foreign currency denominated liabilities and relatively low levels of foreign currency reserves predisposed the country to large and damaging capital outflows, as monetary policy started to normalise in advanced economies.
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