South Africa: Gordhan Admits Dampening Effect of Fiscal Consolidation

The fiscal consolidation approach in the mini budget is likely to have a dampening effect on economic activity in South Africa, Finance Minister Pravin Gordhan admitted in Parliament.

But he stressed that over the medium term, a further loss of confidence and a rating downgrade - which could prompt higher interest rates and large capital outflows - remain greater risks to the economy than the likely effects of fiscal consolidation.

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