UPDATE 2-S.Africa economic growth slows on power cuts

(Adds details, reaction)

By Gordon Bell

PRETORIA, May 27 (Reuters) - South Africa's economic growth eased to a 6-1/2 year low in the first quarter of 2008, stung by a crippling power crisis and slowing demand.

Statistics South Africa said on Tuesday first quarter growth slowed to 2.1 percent on a seasonally adjusted and annualised basis -- its lowest level since the third quarter of 2001 -- from 5.3 percent in the fourth quarter of last year.

The number was well below a Reuters poll consensus of 2.4 percent and creates a dilemma for a central bank trying to tackle soaring inflation.

The Reserve Bank has raised its repo rate by 450 basis points to 11.5 percent since June 2006, but inflation keeps surging.

While the weak growth data is unlikely to stop another increase when the policy committee meets on June 11-12 following hawkish comments from bank Governor Tito Mboweni, it does raise concern about the impact of hikes on already waning momentum in the economy.

Mining and manufacturing were the main contributors to the slower growth.

"There is definitely a slowdown in the economy ... the two industries that constrained growth (the most) were mining and quarrying, and manufacturing," said Joe de Beer, executive manager for national accounts at Stats S.A.