However, this strategy remained beneficial given that the global economy was characterised by low and falling inflation and robust economic growth. This demand for excess yield gave rise to, amongst other things, the boom in the US sub-prime market. The economic and financial environment has almost been a utopia situation in certain respects, displaying a remarkable resilience, even during recent periods of correction.
Weak economic growth does not just hinder efforts to reduce poverty and inequality; it also weakens public finances. For the current fiscal year, National Treasury projects that the consolidated government deficit will rise to 4.5% of GDP and will only decline to 4.3% next year.