Reserve Bank sees 6.1% GDP fall
South Africa's central bank Tuesday slashed its main interest rate by a full percentage point, the second such cut in less than a month, and predicted the economy would shrink by 6.1 percent in 2020 as a result of the coronavirus pandemic.
The decision was made after an emergency meeting of Monetary Policy Committee (MPC), whose scheduled meeting was due in May.
"The Monetary Policy Committee (MPC) of the South African Reserve Bank decided to cut the repo rate by 100 basis points. This takes the repo rate to 4.25 percent per annum," the bank said in a statement.
This is the third cut this year.
On March 19, the bank cut the rate by one percentage point following a 0.25 percentage point cut in January.
"The COVID-19 outbreak will have a major health and social impact, and forecasting domestic economic activity presents unprecedented uncertainty," central bank governor Lesetja Kganyago told a news conference.
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Three weeks earlier, the bank had forecast growth domestic product this year to contract by 0.2 percent.
It now expects GDP in 2020 to contract by 6.1 percent before growing by 2.2 percent in 2021 and 2.7 percent in 2022, the governor said.
The rand has depreciated by 22.6 percent against the greenback since the start of the year, he said.
South Africa, which has the biggest industrialised economy in Africa, slipped into a recession during the final quarter of 2019.
It has the highest recorded numbers of coronavirus infection in sub-Saharan Africa, with 2,272 cases, including 27 fatalities.
The outbreak has prompted President Cyril Ramaphosa to impose a total lockdown, which kicked into action on March 27 and is due to run to end of April.