Summary

The current Ukraine-Russia war has created a new multifaceted risk to the South African economy, economic outlook, and thus the making of monetary policy. The war exacerbates supply chain bottlenecks and inflationary pressures via higher energy and food prices which could probably result in a more rapid tightening of monetary policy and impose additional fiscal pressures. Mounting inflationary pressures and rising interest rates will hurt discretionary income and would have an adverse impact on consumer spending, economic growth,  employment, poverty and food security. For UNDP programming, the challenge is designing and implementing effective measures to cushion the effects of the war on the most vulnerable South Africans. At the same time, the impact of the Ukraine war presents UNDP with opportunities to support South Africa’s green resilient and  inclusive recovery that:

‐          addresses persistent challenges of poverty, inequality, unemployment  and climate change simultaneously and systematically; and

‐          creates inclusive opportunities to ensure vulnerable population groups are not left behind