With household spending cooling and businesses reining in production and investment and cutting staff, South African economic activity will be extremely weak through most of 2009, says Moody's Economy.com in a research note.
"While looser monetary policy and a moderate recovery in external demand are expected to help put the economy back on track next year, growth will remain well below potential, muting job creation," they say.
The economists say that further easing is expected in the first half of 2009.
"With most sectors of the economy following a grim trajectory and the government keen to maintain a conservative fiscal policy focused on infrastructure spending, the SARB is leading the country's fight against recession," they say.
The economists note that output contracted for the first time in a decade in the final quarter of 2008.
"GDP fell 1.8 percent in seasonally adjusted annualised terms, after rising just 0.2 percent in the third quarter. High-frequency indicators suggest another contraction in GDP in the first quarter," conclude the economists.
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