Big rate cut demanded

Cape Town - The Congress of South African Trade Unions (Cosatu) said it is "horrified" that SA is officially in a recession, and has described it as a "national crisis".

It called on government to implement emergency protectionist measures and expansionary policies to counteract the recession's effects.

Cosatu's statement follows the announcement on Tuesday that the country sank into its first official recession in 17 years in the first quarter of 2009, with a massive 6.4% collapse in gross domestic product (GDP) on a quarterly basis, following a fall of 1.8% in the fourth quarter of 2008.

"The fall is even bigger than the -0.7% to -5.2% the so-called experts predicted," said Cosatu spokesperson Patrick Craven.

Cosatu has called for an immediate cut in the repo rate of at least 200 base points to stimulate investment and demand. It also wants emergency measures to protect vulnerable industries, and an expanded public works programme to provide work for the unemployed.

Meanwhile the, Democratic Alliance joined the chorus for interest rate relief.

However, it slammed government saying the situation proved it had not taken the necessary steps to ensure that South Africa survives the worst effects of the global economic crisis.

"In the light of this larger than expected contraction of the economy, it is now more clear than ever that government, labour and business need to work together to find solutions to the economy's woes," said party spokesperson Ross van der Linde.

"These include lowering wage expectations, targeted assistance to certain labour-intensive industries and lifting the numerous constraints that stifle business productivity, expansion and job creation."

- Fin24.com