"Global conditions are shaping South Africa's economy," said Chris Loewald, the Reserve Bank's senior deputy head of research, at the bank's monetary policy forum in Pretoria. Household spending had declined, and was expected to diminish further in the third and fourth quarters of the year.
Despite the softer economy, deterioration in South Africa's gross domestic product (GDP) had been mild so far this year, although forecasts could be revised in November when the bank's Monetary Policy Committee met.
At previous monetary policy meetings, some optimism about the economic outlook had "crept in", but this was now gone.
"Compared to where we were 18 months ago, expectations have certainly taken a turn for the worse," Loewald said.
Risks to inflation remained in the balance, with a potential further weakening of the rand.
Strikes in the mining sector – and consequent high wage settlements – were a serious issue for the economy, said Reserve Bank Governor Gill Marcus.
Wage settlements in themselves were not necessarily a problem, but they should be accompanied by improvements in labour productivity.
"It depends what it turns out to be," she said, noting that the average wage settlement in the case of Lonmin was in the order of 10% to 14%, rather than 22% as reported. While some workers may have gotten a 22% increase, the average worker had received less.
"Our concern is if your settlement is unaffordable," she said. If settlements were unaffordable, job losses were likely to follow.
At the same time, South Africa already had a high unemployment rate, and had lost a million jobs in the 2009 recession.
Asked about the likely effect of e-tolls on consumer spending, Marcus said there was no doubt that consumers were under pressure. However, e-tolls would effect only Gauteng consumers, and electricity and petrol price increases would have a greater effect. Good roads systems themselves had an economic benefit.
Rather, South Africa needed to ask what was the most sustainable way to finance infrastructure, she said.
The bank also released its monetary policy review on Tuesday.
Real exports of goods and services contracted by 6.2% in the second quarter of 2012, reflecting slowing global economic growth. Import volumes increased during this period as a result of buoyant domestic expenditure.
South Africa's economic outlook was not helped by the intensified global financial crisis and slower global growth. This reduced commodity prices and domestic exports. – Sapa