Three more limited rate cuts of 50 basis points are expected in South Africa, said Professor Ben Smit of the Bureau for Economic Research (BER) on Thursday.

"Maybe the Bank decides to go a bit further than that. The recent speech by the Governor acknowledges recession. We believe we will see a headline number in the press of around -4.1 percent in the first quarter (Q1), so we are looking at very clear recessionary conditions, but we will recover moderately," said Smit.

He said some improvement could be expected from the third quarter of this year. "The world economy is driving the process by and large," he added.

Smit pointed out that the global crisis has probably had about a four percent impact on the BER's GDP forecasts. He notes the BER had expected 09 growth of 1.9 percent in a previous survey and 3.6 percent in 2010, but current forecasts are -0.8 percent and 2.5 percent.

The BER sees inflation in South Africa at an average of 6.8 percent in 2009, dipping below 6 percent in August, but ending the year back at 6.9 percent as a result of base effects. Thereafter inflation is expected to move back to within target range, averaging 5.3 percent in 2010.

Employment, which tends to lag output growth, is expected to decline by 2.2 percent in 2009, recovering marginally by 0.7 percent in 2010. The BER sees South Africa''s nominal wage rate at an annual average 8.3 percent in 2009 from 9.9 percent in 2008, dipping to 6.3 percent in 2010.

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