SA 'in first economic recession since 1992'

The case for a 100 basis point interest rate cut at the end of the month has been cemented by significantly weaker-than-expected economic data over the past few weeks, said economists from Standard Bank, Danelee van Dyk and Shireen Darmalingam, on Friday. "We are unquestionably in the first economic recession since 1992," they said.

The case for a 100 basis point interest rate cut at the end of the month has been cemented by significantly weaker-than-expected economic data over the past few weeks, said economists from Standard Bank, Danelee van Dyk and Shireen Darmalingam, on Friday. "We are unquestionably in the first economic recession since 1992," they said.

"Manufacturing production slumped by a record 15percent year on year and mining production contracted by a significant 12,8percent year on year in February - the 20th contraction over the past 23 months.

Retail sales contracted by 4,5percent year on year in February, the weakest since the start of the new survey from 2003, and wholesale trade posted the worst performance of 8,9percent year on year over the same period in February," they said.

They added that declining capacity utilisation was "unsurprisingly" spilling over into electricity consumption, having slumped by 10,2percent year on year. As a result, electricity production dropped by 11,2percent year on year in February, the worst on record.

They said this painted a gloomy view for gross domestic product growth in the first quarter, which would "undoubtedly" be weaker than the 1,8percent quarterly annualised contraction in the fourth quarter last year. "With no local data due for next week, direction will come from international data releases, which are unlikely to be inspirational," they said. - I-Net Bridge

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