The credit-to-GDP gap, which was in line with the positive levels of the credit-to-GDP gap of most advanced economies during the build-up phase of the global financial crisis, is currently below its long-term trend in South Africa.
Recently, Christine Lagarde, the MD of the IMF, argued that even if the process of interestrate increases by the US Fed is well-managed, it may result in excessive volatility in financial markets and trigger a reversal of capital flows, particularly from vulnerable emerging market economies as investors reassess their perception of risk.