As the global and domestic economy become less risky in the coming months and years, the build-up of these financial positions will occur again. Foreign investors will re-enter South African markets (and other emerging markets) due to better real growth differentials and higher yields, while residents will rebuild diversified portfolios that include foreign assets.
We continue to expect inflation to decline over the course of the year as supply constraints ease and demand moderates because of the waning effects of fiscal support and the removal of monetary policy accommodation. But we are attentive to the risks of potential further upward pressure on inflation expectations and inflation itself from a number of factors.