South Africa’s Weak GDP Won’t Spur Populists, Central Bank Governor Says
(Bloomberg) -- South Africa’s bad economic performance is unlikely to give more sway to populist voices and will rather empower reformers in the government to pursue the right policies, Reserve Bank Governor Lesetja Kganyago said.
“We cannot stop some people from saying populist things, but we can win the policy debates – and we are winning,” Kganyago told an investor conference Thursday in New York in his second reference to populism this week. “Bad economic outcomes, in this case, seem to be supporting better policies.”
Kganyago said on Oct. 30 the nation spends too much time debating populist issues such as the proposed nationalization of the central bank, instead of focusing on steps to boost the economy, which fell into a recession in the second quarter. Gross domestic product hasn’t expanded at more than 2 percent annually since 2013, complicating the government’s task of trimming a 27 percent jobless rate and reducing poverty.
The ruling African National Congress decided in December it would pursue changes to the nation’s constitution to make land expropriation without compensation easier and that the Reserve Bank should be state-owned, like most other central banks. In August, the radical Economic Freedom Fighters political party, which has won support by vowing to nationalize everything from land to banks, tabled a bill to change the ownership of the Reserve Bank.
“South Africa has its share of populists who want to do radical things,” Kganyago said. “But it’s increasingly clear that the center will hold. We have strong institutions, and we have the better arguments.”
The country aspires to growth rates nearer its historical trend levels, he said.
“We are recovering from a period of self-inflicted injuries, and there are good growth opportunities that we can exploit when we have recovered our health,” Kganyago said. “Our politics have taken a reformist turn, which should permit a constructive response, rather than a destructive reaction, to the disappointments of the recent past. I am confident that South Africa tomorrow will be better than South Africa today.”
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