S.Africa c.bank sees further GDP contraction in Q1

JOHANNESBURG (Reuters) - South Africa's business cycle indicators have weakened sharply over the past few months, "almost guaranteeing" another contraction in the first quarter of 2009, central bank Chief Economist Monde Mnyande said on Thursday.

He said in a speech posted on the Reserve Bank's website, the trend pointed to a continued slowdown in aggregate economic activity this year.

Mnyande defended the bank's inflation targeting framework but added that the intensity of the global financial crisis was forcing central banks to reconsider the links between financial stability and monetary policy.

South Africa's economy contracted by 1.8 percent in the fourth quarter of 2008, which means a second quarter of decline will put it in recession.