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Global economy shows signs of recovery – CBL

CBL Governor Dr Retšelisitsoe Matlanyane

May 28, 2021 3 min read

3 min read

THE Governor of the Central Bank of Lesotho (CBL) Dr Retšelisitsoe Matlanyane says the global economy has shown some signs of recovery since March 21.

This she said when giving details of CBL’s Monetary Policy Committee (MPC)'s 89th meeting held this week in Maseru.

Dr Matlanyane said this has largely been underpinned by steady gains in vaccinations, sizeable fiscal stimulus packages and a general pick up in global demand.
She said despite the improvements, global growth prospects in the near-term remain highly uncertain and uneven across countries.
“Growth remains vulnerable to new mutations of the virus, vaccine availability and lack of uniformity in rates of country vaccinations. Further downside risks include global trade tensions, limited policy space and possible tightening of containment measures as infections rise,” she said.
The International Monetary Fund (IMF) World Economic Outlook report of April 2021 revised up the 2021 global gross domestic product (GDP) forecasts to six percent, from the 5.5 percent forecast in January 2021 saying similarly, growth in the sub- Saharan Africa region is expected to accelerate by 3.4 percent in 2021, an upward revision of 0.2 percent from the January 2021 forecast.

It shows that global economic activity improved during the first quarter of 2021, although in a manner that was uneven across countries, United States (US) real GDP increased at the annual rate of 0.4 percent in the first quarter of 2021, following a decline of 2.4 percent in the quarter ending December 2020.
“In the Euro Area, real GDP contracted by 1.8 percent in the first quarter, after a decline of 4.9 percent in quarter four of 2020. Japan’s real GDP fell by 1.3 percent in the first quarter of 2021, following growth of 2.8 percent in the previous quarter. The first quarter real GDP in the United Kingdom (UK) contracted by 6.1 percent annually, a slight improvement from a decline of 7.3 percent in the last quarter of 2020.
“In emerging market economies, China realised an annual real GDP growth of 18.3 percent in the first quarter, compared to 6.5 percent in the fourth quarter,” she added.

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She noted that the global labour market developments largely improved during the first quarter of 2021 on account of looser lockdown restrictions, vaccination drives and attempts to return to normalcy saying on price developments, inflation rates have generally picked up in the US, UK, Euro Area, China, India and South Africa in the first quarter of 2021 adding that the monetary policy stance across advanced economies remained accommodative, with policy rates in the US, the Euro Area and UK kept close to zero.
She mentioned that global financial markets reflected mixed signs of volatility and easing market risk saying yields in emerging markets, especially South Africa, barely changed and remained subdued on the short and long end. However, stated that investors were net buyers of South African assets, with positive risk sentiment outweighing concerns emanating from negative debt developments adding that the rand is expected to remain range bound, with high downside risks and volatility. LeNA

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