South African Reserve Bank governor Tito Mboweni said on Thursday that although things looked good at present, he warned of danger signs in the economy, which could signal “some major inflationary consequences down the road”.
Speaking to the Parliamentary finance portfolio committee, the governor said while “things generally look good … there are lots of dangers”.
Included in these dangers were “very strong domestic demand, very strong credit growth and worrying signs of increasing household debt as a ratio of household income”.
There are also persistently high oil prices, major imbalances in the balance-of-payments account and a “very large current account deficit” of more than 6% of GDP.
Urging that the party must slow down a bit, Mboweni said he noticed “much conspicuous consumption”, with many people driving French and Italian cars.
“There is something wrong in the economy encouraging this conspicuous consumption. Maybe that [borrowed] money is too cheap,” he said. — I-Net Bridge