Pretoria - South Africa's annual Gross Domestic Product decelerated to 3.1 percent in 2008, according to the Reserve Bank's Quarterly Bulletin released on Wednesday
Following successive growth rates of 1.7 percent, 5 percent and 0.2 percent in the preceding three quarters, South Africa's real gross domestic product contracted at an annualised rate of 1.8 per cent in the fourth quarter of 2008.
The annual growth rates varied between 4.9 and 5.3 percent from 2004 to 2007.
The Reserve Bank said it was a disappointing outcome following four successive years in which annual growth had remained around 5 percent.
This was the first decline since 1998, and could mainly be attributed to a pressure on particularly the manufacturing sector. For the non-agricultural sectors, the contraction set in earlier, with real gross domestic product declining in both the third and fourth quarters of 2008.
According to the bulletin, South Africa could not escape the negative consequences of the global financial crisis despite the country's financial institutions having no direct exposure to assets that formed part of the deteriorating credit markets.
"Deteriorating consumer and business confidence, declining global demand, and a
relatively tight domestic monetary policy were reflected in a contraction in real gross
domestic product in the final quarter of 2008," the bank reported.
Since 2006, inflation has stubbornly high despite steps to tighten monetary policy.
The bank also reported that South Africa's real gross domestic expenditure declined at an annualised rate of 3.9 percent in the fourth quarter of 2008. This followed an increase of 0.7 percent registered in the third quarter of last year.
In December 2008 the twelve-month CPIX inflation rate was moderated to 10.3 percent. In
January 2009 the reweighted, rebased and reconstituted new headline CPI for all urban areas, was adopted as the new inflation target measure, recorded a twelve-month rate of increase of 8.1 percent.
On Tuesday the MPC decided to cut the repo rate by 100 basis points to 9.5 percent. The MPC has also decided to meet monthly, instead of bimonthly to respond sooner to the changing economic climate.
