Gloomy comments from South Africa's central bank on the impact of global financial turmoil on the country's capital formation, key to growth, were the backdrop to a fall in bond yields and a volatile day for the rand, which ended down against the dollar, according to Reuters. Analysts on Wednesday said Africa's biggest economy, heavily dependent on the wider global economy's health, will be hurt by the uncertainty stemming from sovereign debt worries in the U.S. and Europe. The bond market was starting to price in the slim chance of rate cut to counter this, traders said. A survey showed confidence among South African businesses fell to its lowest level so far this year in July, weighed by the bleak global outlook. Officials from the Reserve Bank said fixed capital formation -- the expenditure on fixed capital assets such as buildings and machinery crucial to the country's economic growth -- had also been hit by the uncertain climate. Bank officials told members of parliament consumer spending was expected to underpin growth in the economy even as external uncertainties remain, but recent data shows indebted households are still reluctant to spend after a recession in 2009 which slashed a million jobs. The Treasury expects growth of 3.4 percent this year as the economy slowly recovers, helped by 650 basis points of interest rates cuts in the two-years to November last year -- but some analysts see a lower outcome as global growth s. -- SPA
