Bloomberg News

South Africa Recovery Fragile Amid Greek Risk, Marcus Says

June 30, 2011

(Updates with Marcus’s comments in second paragraph.)

June 30 (Bloomberg) -- South African Reserve Bank Governor Gill Marcus said the country’s economic recovery remains fragile and the debt crisis in Greece and other European countries complicates the outlook for monetary policy.

“In times of such great uncertainty it’s important for a central bank to remain focused on its primary responsibility, but vigilant and aware of what’s happening in the global and domestic economic environment,” Marcus said in a speech at the central bank’s ordinary general meeting in Pretoria today.

Marcus has left South Africa’s benchmark interest rate unchanged at a 30-year low of 5.5 percent, even as she forecast inflation may breach the 3 percent to 6 percent target next year, to help support the recovery. She said economic data are giving mixed signals about what interest rate is needed.

Rising food and fuel prices helped boost inflation to 4.6 percent in May from 4.2 percent. At the same time, growth in manufacturing, which makes up 15 percent of the economy, slowed to an annual 0.4 percent in April from 4.9 percent the previous month.

While “there are signs that the recovery is becoming more self-sustained,” the manufacturing figures and a slowdown in building and investment also highlight its fragility, Marcus said.

--Editors: Ben Holland, Philip Sanders.

To contact the reporter on this story: Nasreen Seria in Johannesburg at nseria@bloomberg.net; Maram Mazen in Johannesburg at mmazen@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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