JOHANNESBURG – The governor of the South African Reserve Bank said on Tuesday that although the decision by Britain to exit the European Union would not cause a recession, already slowing economic growth would be hit.
Speaking to Bloomberg TV in Portugal Lesetja Kganyago said: “We would not venture into a recession at this stage, but there is no doubt that it will slow the South African economy from the weak growth that we already have.”
Finance Minister Pravin Gordhan said on Sunday financial market volatility caused by Britain’s decision to quit the EU, which sent the rand tumbling, could hurt investment flows into South Africa.
Britain voted last week in a referendum to leave the EU, wiping billions of dollars off world equity markets.
“It has affected sentiment and investors were looking for safe assets. We are not seen as one of the safe assets,” Kganyago said.
South Africa’s economy is barely growing, hobbled by power cuts last year, low commodity prices, drought and political ructions that have unnerved investors.
Africa’s most advanced economy contracted in the first quarter, putting it on track for its first recession in seven years. (Reuters)