Interest rate cut ‘not enough to reverse SA economic slump’
While the repo rate cut has brought some relief for those paying off their homes and vehicles, Economist Azar Jammine says it isn't enough to reverse the economy's downward growth trend.
The South African Reserve Bank dropped the repo rate by 25 basis points to 7% on Thursday, bringing the prime lending rate down to 10.5%.
" This interest rate cut in itself is only going to help the economy marginally. It's not sufficient to reverse the declining trend of the South African economy, but hopefully, if interest rates can pull further in the coming two years on the back of this effective downward revision of inflation targets, then there could start being an improvement in the economy in two to three years' time."
Jammine says he expects growth to remain subdued until 2027.
READ: SA faces tough trade-off as looming US tariffs threaten jobs, economy
"Bear in mind that the Reserve Bank actually revised its economic growth forecast for the economy for this year down to a 0.9% growth rate from 1.2% previously, but in the longer term, like in 2027, it's revised the forecast growth rate upwards to 2% from 1.8%.
"Hopefully, that could turn out to be the start of a significantly improving trend thereafter."
Find us on social media
Follow the ECR Newswatch WhatsApp channel here
MORE ON ECR
