The International Monetary Fund (IMF) forecasts global growth of 2.9% this year, after growth of 3.4% in 2022, and this means weaker demand for the exports of small, open economies such as South Africa. Implications for the domestic economy are twofold: first, directly through weaker growth, and second, through a possible deterioration in our external accounts.
Why is there this difference? There’s no secret agreement. When the currency union was founded governments decided to transfer functions and tasks that are necessary for monetary policy to the Eurosystem and to leave other tasks as the responsibility of the national central banks. They invest, for instance, to cover the pensions of their employees or to build up capital and reserves.