Prospects for the South African economy have continued to improve despite the fact that the rand is at a five-year peak to the dollar, Reserve Bank Governor Tito Mboweni said on Thursday.
Speaking at a dinner of the South African Institute Of Electrical Engineers at the Rand Club in Johannesburg, Mboweni said that tourism had fared better than expected and manufacturing output had improved significantly.
The trade sector in particular was thriving, consumer confidence was at record levels and the world growth outlook remained favourable.
”Although business leaders continue warning of eroding profits and impending cuts in investment and jobs, the local economy has been adjusting well to a stronger, more stable currency,” said Mboweni.
Significant problems had been experienced by many mining and manufacturing enterprises as a result of the strength of the rand.
”This has had serious repercussions for the profitability of these enterprises, as well as their investment planning and employment. The recovery in the exchange rate of the rand has, however, forced companies to restructure their firms to cushion the impact of the strengthening rand.”
The restructuring had contributed to increasing resilience of the South African economy. The strength of the rand was not directly related to the monetary policy framework.
”We accordingly still belief that an inflation-targeting monetary policy framework allows an independent central bank to commit credibly to its long-term goal of price stability.” – Sapa