With household spending cooling and businesses reining in production and investment and cutting staff, South African economic activity will be extremely weak through most of 2009, says Moody’s Economy.com in a research note.
“While looser monetary policy and a moderate recovery in external demand are expected to help put the economy back on track next year, growth will remain well below potential, muting job creation,” they say.
“With most sectors of the economy following a grim trajectory and the government keen to maintain a conservative fiscal policy focussed on infrastructure spending, the South African Reserve Bank is leading the country’s fight against recession,” they say.
The economists note that output contracted for the first time in a decade in the final quarter of 2008.
“GDP fell 1,8% in seasonally adjusted annualised terms, after rising just 0,2% in the third quarter.
High-frequency indicators suggest another contraction in GDP in the first quarter,” conclude the economists. — I-Net Bridge