Figures due tomorrow have the most potential to shock, with market consensus betting that economic growth slowed to a paltry 0,3% in the third quarter, the lowest in a decade. Forecasts from a Reuters poll of 18 economists show that five are betting on an outright contraction in gross domestic product (GDP), which would raise pressure on the Reserve Bank to cut rates soon. Output from three of the economy?s main sectors, manufacturing, mining and retail, is believed to have fallen between July and September. In addition, the effects of the global crisis have yet to make themselves felt in SA, which will put more brakes on growth.

?We expect foreign demand for goods and investment in SA to contract, pushing the country into a recession,? says Alvise Marino, emerging markets economist for IDEAglobal in New York. He predicts the economy will shrink 0,3% next year. That would strengthen the argument for a quick rate cut , but most economists do not have as bleak a view of SA?s outlook ? although they have all been steadily revising their forecasts downward.

Inflation data on Wednesday will reinforce the view that price pressures are easing, despite the effects of the rand?s sharp slide in response to the global downturn. ?In our view, the window for monetary policy easing is already wide open,? says Vunani Securities in a research note. But the Bank?s monetary policy committee is likely to err on the side of caution, given global turmoil and the rand?s volatility, it says. That means that while it would not be a surprise if the committee cut the 12% repo rate next month, the most likely scenario is for an initial cut in February, Vunani says. Markets are likely to get good news on Wednesday, when Statistics SA unveils data expected to show that the CPIX inflation rate slowed to 12,5% last month from 13% in September. That will reinforce perceptions that CPIX peaked at a record 13,6% in August, and will continue to subside over the rest of this year.

That is good news as CPIX has breached its official 3%-6% target range in every month since April last year, driven mainly by higher food and fuel prices . The easing price trend will gather momentum at the start of next year, when a revamp of official consumer price data is likely to lower the official inflation rate by two to three percentage points. A deepening global recession will add to the downward pressure on inflation, curbing foreign and domestic demand for goods.

In the meantime, a 2,6% fall in petrol prices last month would have helped curb consumer prices. Further cuts are on the cards, given the latest plunge in global oil prices to 3½ - year lows below $50 a barrel. ?Based on lower petrol prices and further moderation in food price inflation, we expect CPIX to end the year at around 11,7%,? says Investec economist Kgotso Radira in a research note. Producer price figures due on Thursday will add to the benign inflation outlook, with forecasts predicting they fell to 14,8% last month from 16% in September. Falls in prices of fuel and other commodities would have put downward pressure on producer prices, the inflation measure for goods leaving local mines, farms and factories. They are still seen as a leading indicator for consumer inflation, but less so than in the past due to revisions that sharply boosted the weight carried by minerals. Finally, credit figures due on Friday are expected to show that embattled consumers were forced to borrow less last month.

Growth in private sector credit extension, which includes corporate borrowing, is set to have slowed to 15,4% from 16,4% in September. ?We still see a long steep uphill trail for debt-ridden South Africans,? Marino says. Changes in interest rates take up to two years to make themselves felt fully in an economy, which means the effect of a five percentage point rise over the past two years is still feeding through. Debt costs for households have climbed to 11,6% of disposable income, their highest level since 1998. Both bankruptcies and company failures are climbing. Figures from the South African Revenue Service due on Friday are likely to show the trade deficit narrowed to R6bn last month from R7,1 bn in September, but the figures are notoriously volatile. During the month, the oil price fell 35%, platinum prices 20% while the rand 16% against the dollar, Efficient Research analyst Doret Els says. ?Waning consumer appetite for imports as economic activity slows will count in favour of an improved trade balance.

?If the rand plays along, the plunge in oil prices will also help lower our mineral imports.? Oil is the biggest single item on SA?s import bill. A lower trade gap will help ease pressure on the ballooning deficit on the current account, its broadest measure of trade in goods and services.