SARB sees South Africa exiting recession

Johannesburg - SA Reserve Bank (SARB) governor Lesetja Kganyago said on Friday the country is expected to have emerged from its first recession for eight years during the second quarter of this year.

SA's economy unexpectedly contracted in the first quarter of this year, slipping into its first recession since 2009.

"We believe that the worst is behind us - and that growth in the second quarter of this year will be positive," said Kganyago.

The bank forecasts the economy to grow by 0.5% this year, which it expects to rise to 1.5% in the next two years.

"This is clearly too low to make any meaningful inroads on unemployment," he said. South Africa's joblessness stands at a record high of 27.7%.

Last year SA's economy grew a paltry 0.3%, posting the "worst domestic growth performance" since the global financial crisis of 2008 to 2009, said the governor.

Last week the bank slashed its key interest rate for the first time in five years as SA battled the recession and international credit downgrades.

SA's economic woes have been exacerbated by the political uncertainty that followed President Jacob Zuma's controversial March reshuffle of ministers.

The shake-up, which included the axing of respected former finance minister Pravin Gordhan and his deputy Mcebisi Jonas, sent tremors through the financial markets.

It also prompted ratings agencies Fitch and Standard & Poor's to downgrade SA's credit rating to junk status.

SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.

Read Fin24's top stories trending on Twitter: Fin24’s top stories