Reserve Bank: Return of foreign investors not enough to boost economic growth

On Thursday, the Reserve Bank governor announced that the repo rate was being lowered by 25 basis points.

FILE: South African Reserve Bank Governor Lesetja Kganyago. Picture: @SAReserveBank/Twitter

JOHANNESBURG – Reserve Bank Governor Lesetja Kganyago has said there has been a return of foreign investors despite the country battling COVID-19.

The governor said this before announcing that the repo rate was being lowered by 25 basis points.

The bank has now decreased the rate by 300 basis points this year.

Kganyago said foreign investment had increased due to push and pull factors and excess liquidity in developed markets.

But he said this was still not enough to help the country's growth.

β€œThe bank currently expects GDP in 2020 to contract by 7.3% compared to 7% contraction forecast in May.”

He said more jobs were also set to be affected and monetary policy could not on its own improve potential growth.

But he said inflation was set to remain in check.

"The overall risks to the inflation outlook at this time appear to be balanced.”

Kganyago said future decisions on the interest rate would continue to be data-dependent and sensitive to risks to the overall outlook.

Download the EWN app to your iOS or Android device.