Economists trimmed their growth forecasts further for South Africa for 2011 and the following two years and said interest rates would stay low for longer, reflecting the impact of a worsening global outlook, a Reuters poll showed on Thursday.
The Reuters Econometer poll - an index of six weighted indicators that looks two years ahead - showed a median consensus for GDP growth of 3.2 percent this year and 3.4 percent in 2012, both forecasts slightly lower than those given in the August poll.
Given the weaker growth view, economists also pushed back their forecasts for when interest rates would rise from their current 30-year lows.
Growth in Africa's biggest economy slowed sharply to 1.3 percent in the second quarter of 2011 compared with a downwardly revised 4.5 percent rise in the first.
“We have downgraded our US, Europe and Chinese growth rates. As a result our entire global economic rate has now been downgraded,” said Gina Schoeman, senior economist at Absa Capital, adding South Africa was also in the mix.
South Africa's Treasury will release revised forecasts on Oct. 25 and is also expected to trim its 2011 growth expectations from 3.4 percent, after Finance Minister Pravin Gordhan said forecasts for the next few years were ambitious.
STEADY RATES
The Reserve Bank has left the repo rate steady at 5.5 percent this year after reducing it by 650 basis points in the two years to the end of 2010.
The poll showed the repo rate will likely end 2011 unchanged, rising by only 50 basis points in 2012, down from a forecast of 6.5 percent last month.
A few analysts called for rates to be cut, but rising inflation and a rand currency that has weakened by 20 percent so far this year have reduced the chance of further easing.
While inflation expectations had not changed much in the poll, forecasts for the rand were weaker.
The rand was seen ending this year at 7.52 to the dollar, 7.68 by the end of 2012 and 7.76 a year after that.
The rand currently trades around 7.97 to the dollar, with technical charts pointing to a correction after an overdone sell-off that saw it hit 28-month lows at 8.4950 last month.
“If the rand is quite weak, it will have an impact on the inflation rate,” said Salomi Odendaal, economist at Citadel adding the currency will weigh heavily on the Reserve Bank's policy decisions in the next few months.
The Econometer index stabilised to 267.30 in September from 263.20 in August. - Reuters