A leading economist has suggested that South Africa’s economy will show a slight recovery by the end of the year.

The South African economy is expected to contract by 2.5% in the first quarter, followed by a slower contraction of 1% in the second quarter of 2009, said senior Absa analyst Jacques du Toit, adding that it will show a slight recovery by year-end.

Speaking at a meeting hosted by the National Association of Automobile Manufacturers of Southern Africa, du Toit added that GDP growth is expected to contract by around 0.5% for 2009.

Figures released in February revealed that the South African economy contracted by 1.8% in the final three months of 2008, and it is widely expected that the economy will have contracted further in the first quarter of the year.

Du Toit added that recent measures such as the cuts in interest rates should have a positive impact on the economy. Absa, in line with other financial institutions, forecast a further 150 basis point cut in interest rates this year, bringing the prime rate back to 10.5%.