South Africa economy contracts for first time since 2009

PRETORIA (Reuters) - South Africa's economy shrank 0.6 percent quarter-on-quarter in the first three months of this year as a massive decline in output from the strike-hit platinum mining sector triggered the first overall quarterly contraction since a 2009 recession.

The economy had expanded 3.8 percent in the fourth quarter of 2013.

On an unadjusted year-on-year basis, the economy grew by 1.6 percent in the first quarter compared with 2 percent in Q4, Statistics South Africa said.

The 24.7 percent decline in mining output was the biggest quarterly contraction since 1967. The platinum strike now in its fifth month has halted mines that normally account for 40 percent of global production of the precious metal.

Economists polled by Reuters had expected an overall quarter-on-quarter contraction of 0.1 percent, while forecasting year-on-year growth of 1.9 percent.

The rand fell nearly one percent to a session low of 10.44 against the dollar.

Africa's most advanced economy has struggled to recover from a recession five years ago, partly due to industrial action in key sectors such as mining and manufacturing.

The mining strike is the costliest and longest in South Africa's history.

The Reserve Bank kept interest rates steady at 5.5 percent last week - even though it is in a tightening cycle - to try and support faltering economic growth.

The bank slashed its 2014 growth forecast to 2.1 percent from 2.6 percent.