S.A. ECONOMY FALLS AGAIN !

The government is continuing with stimulus spending

The South African economy contracted for the third quarter in succession between April and June, the latest official figures have shown.

It shrank at an annualised rate of 3% during the second quarter of 2009, a less severe decline than the 6.4% contraction from January to March.

Manufacturing was the worst performing sector, seeing output slide 11%.

The central bank cut interest rates last week to help the economy and the government has a stimulus plan.

The South African Reserve Bank trimmed its main lending rate from 7.5% to 7% on 14 August, its sixth cut since December of last year, when rates were at 12%.

Meanwhile, President Jacob Zuma's administration is spending 787bn rand ($98bn; £59bn) over then next three years on infrastructure projects.

With South Africa continuing to experience its first recession in 17 years, retail sales fell 4.5% between April and July.

"People had more disposable income after interest rates went down, but either it is that people are reluctant to spend or are servicing the debt they already have," said Kedibone Mokone, acting manager of national accounts at government agency Statistics South Africa.

Analyst Razia Khan, head of Africa research at Standard Chartered, said the South African economy was continuing "to show signs of stress".

BBC NEWS REPORT.