Reserve Bank Governor Tito Mboweni painted a bleak picture of the local economy and said all signs were pointing to a second quarter of contraction in the first quarter of 2009.
"The outlook for domestic economic growth remains subdued, with no indications of a quick recovery," he said in a televised statement.
"The high frequency data continue to suggest that the negative conditions recorded in the final quarter of 2008 persisted in the first quarter of 2009."
The economy shrunk by 1,8% in the fourth quarter of 2008 and weak manufacturing output numbers point to another contraction, as a global downturn hits exports.
Mboweni said consumer demand remained depressed and could be restrained further by falling house prices and weak asset markets.
"The sluggish domestic demand conditions also appear to have persisted," he said.
The central bank has shifted its focus to an ailing economy, despite inflation staying outside the 3% to 6% target band.
Mboweni said although the near-term inflation outlook had deteriorated, it was expected to follow a downward trend and average 5,4% at the end of the forecast period in the final quarter of 2010.
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