South Africa’s economic outlook improves as reforms take hold

South Africa is making strides in implementing critical economic reforms, according to Reserve Bank Governor Lesetja Kganyago. Addressing reporters on Thursday, Kganyago expressed optimism that the country’s recent success in tackling the longstanding power crisis could pave the way for progress in other sectors.

The central bank has consistently highlighted the need for structural reforms in areas such as energy and freight rail to boost South Africa’s growth potential. However, until a significant improvement in electricity availability earlier this year, the government had struggled to make substantial headway in these crucial initiatives.

“Despite the challenging environment, South Africa is actively addressing and executing its reform program,” Kganyago stated. He attributed the recent progress to the government’s successful management of the power crisis, which marked the first time in years that the country experienced five consecutive months without load shedding.

If the government can effectively address other structural constraints, Kganyago believes that South Africa’s growth rate could reach 3.5%. This estimate aligns with a similar projection made by the deputy finance minister recently.

While acknowledging the ongoing challenges in the logistics sector, Kganyago noted that the state-owned Transnet company is working to improve its freight rail and port services. However, the company faces significant hurdles, including equipment shortages and maintenance backlogs.

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