United Democratic Movement leader Bantu Holomisa has called for a "drastic" cut in interest rates to stimulate South Africa's shrinking economy.

"The economy is in serious trouble," he warned in a statement on Tuesday.

His call comes a day after the release of official figures showing the economy shrank by a whopping 6.4 percent in the first quarter of this year, and a day ahead of a Reserve Bank monetary policy committee announcement on interest rates.

Holomisa said his party was deeply concerned about the state of the SA economy.

"We need a national conversation on matters such as the Reserve Bank's inflation target. In the past number of years, when the rest of the world slashed interest rates, ours was continuously raised.

"The effect was to keep many South Africans on the fringes of the economy at a time of growth.

"What is required now is for the Reserve Bank to make a drastic cut in the interest rate to kick-start the economy. High interest rates are frustrating the attempt to create jobs," he said.

South Africa could not be "held to ransom by Mr (Tito) Mboweni and a small team of people who depend on statistics that have at times been exposed as inaccurate".

The crisis confirmed it was time for a national economic indaba, Holomisa said.

Sapa