Lesetja Kganyago’s economic warning

The global economy is entering a phase of new challenges “even as the recent ones have yet to be overcome,” according to South Africa’s central bank chief.

“There is little fiscal or monetary policy space available to deal with the risks that could emerge to financial stability, renewed inflation pressures or even the growing challenge of climate change,” Lesetja Kganyago said in an address at the South African Reserve Bank’s annual general meeting Tuesday.

Kganyago’s warning comes as “stubbornly high” global inflation, record public-debt levels, geopolitical tensions in the Middle East and upcoming US elections cloud the outlook for economic growth and policies worldwide.

Under his leadership, the South African Reserve Bank was quick to identify and respond to the surge in global inflation between 2021 and 2023, outshining the efforts of several developed and emerging market central banks to stem consumer-price growth.

“Greater stability in global affairs and more sustainable fiscal policy settings across the Group of 20 countries would help to dampen uncertainty and enable longer-term horizons for policymakers, firms and households,” he said.

Lowering public debt levels and slowing inflation would also help to boost long-term economic growth prospects, bolster private investment, potentially ease monetary policy and support lending, he said.