The latest economic data released by Statistics South Africa paint a grim picture of the state of the economy.

Mining production contracted 5.4 per cent while manufacturing growth slowed to 0.4 per cent, the statistics agency reported Thursday .

Economists say South Africans should not be overjoyed with the second quarter gross domestic product (GDP) growth figure of 3.3 percent as these new data point to poor economic growth in the third quarter.

They said Thursday that the slowdown was worse than expected and that the data renewed fears of a recession and a ratings downgrade to junk status.

Low global demand on the back of poor economic prospects is also to blame and household consumption expenditure locally is also under pressure.

An economist at Econmetrix Laura Campbell said: “We had seen the manufacturing sector benefitting from improved competitiveness that we saw in the second quarter.”

The slowdown in the mining sector will impact on other sectors making for tough economic times ahead.

The South African Institute of Race Relations (SAIRR) said: “The decline in the platinum group metals is that they are the source of our biggest export revenue.”

Economists say the South African Reserve Bank is unlikely to have much room to increase interest rates in the short term and will likely only increase rates early next year.

Source: NAM NEWS NETWORK