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If things do not get any worse it will probably still take a number of years before the world is back to more normal growth and output gaps are fully closed‚ Reserve Bank governor Gill Marcus cautioned on Tuesday.

Speaking at a FM Top Companies awards function‚ she said there would probably be at least one or two more forms of the crisis before it could safely be said that recovery was sustainable.

“The economic environment is a difficult one. The world is in its sixth year of crisis: a crisis that has repeatedly mutated‚ shifting its epicentre from a sub-prime crisis to systemic banking crisis; a liquidity‚ fiscal deficit and sovereign debt crisis. Measures taken to address each of these elements have had unintended consequences. Austerity measures have contributed to an unemployment crisis of immense proportions‚ particularly for the young.

“There will probably be at least one or two more forms of the crisis before we can safely say that recovery is sustainable. And even then‚ as we can see in the United States where there are signs of recovery‚ the measures that are outlined to be taken very cautiously and with considerable conditionality‚ such as a tapering off of Quantitative Easing‚ have also had unintended consequences‚” Marcus said.

As had been seen in recent days and weeks‚ the exchange rates of many emerging market economies had been impacted negatively by an outflow of capital. This development could well mark the start of a new mutation of the ongoing global crisis‚ she added.

“If things do not get any worse it will probably still take a number of years before the world is back to more normal growth and output gaps are fully closed. Even then‚ there is debate about whether that new normal would be at a lower rate of growth than in the past. All in all‚ it is a very uncertain and difficult decade for individuals‚ companies and countries‚” Marcus said.

South Africa’s weak first quarter annualised growth rate of 0.9 per cent was‚ to some extent‚ consistent with what was seen happening globally and in other emerging markets and these developments had‚ in part‚ contributed towards a weaker rand exchange rate. But domestic factors had also contributed.

“These have to do with lost production in the mining sector‚ instability caused by violent and often illegal strike action and persistent capacity constraints in infrastructure‚ electricity in particular‚” Marcus noted.

The source of this vulnerability‚ she pointed out‚ was primarily a large current account deficit‚ a high budget deficit‚ rising public debt and relatively low foreign exchange reserves as well as high household indebtedness and inflation close to the top of the target range - all suggesting limited room for fiscal or monetary support.