'Economic recovery only in 2010'

Johannesburg - While rapid easing in interest rates can be expected to limit the depth of the local recession, prospects for economic recovery are increasingly shifting towards the first quarter of 2010, said Standard Bank's economists in a research note on Monday.

"In South Africa the risks to economic growth this year are increasingly to the downside. The likelihood of the economy falling into an outright contraction for the year is now firmly on the cards," they say.

"Clearly, real economic strain will be magnified by the negative feedback loops of deepening global contraction into corporate disinvestment, employment, and subsequently total gross domestic expenditure," say the economists.

Their GDP forecast, according to their new research after a data-heavy week, is 0.2% this year and 3.0% in 2010, before going to 3.7% in 2011 from the 3.1% of 2008 and 5.1% of 2007. They see headline inflation at an annual average of 6.9% this year, then just 5.6% in 2010 and 5.5% in 2011.

The rand is seen at an average of R10.10 to the dollar this year, R8.92 next year and R8.20 in 2011 from the R8.22 average in 2008.

- I-Net Bridge