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By unknown | May 20, 2009 | COMMENTS [ 0 ]

Kea' Modimoeng

Kea' Modimoeng

The SA economy looks set for a second consecutive quarter of negative growth, which would officially put the country in a recession, Reserve Bank Governor Tito Mboweni said yesterday

He was addressing the Road Freight Association seminar in Vanderbijlpark, south of Johannesburg.

"It looks like the negative growth seen in the last quarter of 2008 might have continued into the first quarter," Mboweni said.

The economy contracted 1,8percent in the fourth quarter of 2008, with the manufacturing and mining sectors hit the hardest.

Statistics SA releases the first quarter's gross domestic product data next Tuesday, two days ahead of the Reserve Bank's monetary policy committee meeting and decision on interest rates.

He said that during a period when consumer confidence is low, there is a need to revive the global economy, and while the depth of the global recession might have been reached already, the recovery is likely to be "slow and protracted".

Mboweni said local recovery is dependent on what happens globally and that a removal of the current protectionist tendencies among countries would stimulate the growth of the world economy.

He also cited a need for regulations to "enable free and open competition around the world".

On the Eskom tariff hike proposal he said a "once-off tax" for the power utility's capacity needs would probably be a better option for the average citizen than the proposed 34percent rise.

But Efficient Group economist Dawie Roodt said he totally disagrees with the governor's view on the Eskom tariff hike.

However, he said, he understood Mboweni's position because as a central banker, he can't promote price increases as he is mainly concerned about inflation.


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