TAPERING FEARS:
More and more warnings have been issued over the past few weeks over the potential negative effects for South Africa of what is now considered to be an inevitable pullback by developed countries from their unconventional monetary policy measures. South Africa is seen as particularly vulnerable to a reversal in capital flows as debt-creating flows finance around 80% of the country’s current account deficit. The Inter-national Monetary Fund has cautioned that any prolonged halt to capital inflows could spark a disorderly adjustment to South Africa’s current account and fiscal deficits and even trigger a recession.
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