S.Africa centrabl bank may lower growth forecast

The South Africa’s central bank warned Tuesday that it may trim the country’s economic growth forecast after a worse than expected performance in the first quarter and widespread labour instability.

South Africa’s economic growth rate slumped 0.9 percent in the first quarter according to figures released last week.

“Despite a decent rebound in growth in the fourth quarter of 2012 from the poor outcome of the third quarter, growth in the first quarter of 2013 has turned out worse than expected,” the South African Reserve Bank said in its monetary policy review.

Investment, which took a battering from a rash of wildcat strikes since last year, has slowed further in 2013.

Last month the bank forecast that the country’s economy will grow by 2.4 percent this, but “with the latest data releases, this may need to be revised down”.

A wave of labour unrest in the mining sector has hit hard investor confidence and output.

The bank said weak export demand, worsening terms of trade and sustained domestic spending have further widened the current account deficit on the balance of payments.

“These domestic economic developments became the dominant drivers of the depreciating trend in the exchange value of the rand,” said the bank.

The South African rand last week breached the 10.0 to the dollar level, its lowest in four years.

The bank said core inflation this year “trended upwards” but remained below six percent.