Rand falls in the wake of GDP shock
Gold was little changed at $1,323.55/oz, while platinum was down 0.1% to $823.33. Brent crude had fallen 0.4% to $60.5 a barrel.
Crucial sectors such as mining, manufacturing and trade were the biggest contributors to the GDP slump, with manufacturing plummeting 8.8%.
The 10.8% decline in mining, its biggest fall since the first quarter of 2016, made it the third consecutive quarter of contraction in the sector.
Analysts said the worse-than-expected economic decline has increased the likelihood that the Reserve Bank will cut interest rates in the coming months.
“If the Reserve Bank decides to cut rates at its next meeting in July, assuming that the rand stays where it is at the moment, demand in the economy is so weak that, despite a weaker currency and, for example, higher petrol prices, we don’t really see much inflationary pressure building up in the economy,” said Efficient Group chief economist Dawie Roodt, “Demand is so weak that the central bank can actually safely cut rates a little bit, if the rand behaves.”
Source: businesslive.co.za
