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Johannesburg - The poor economic conditions experienced by South Africa's most significant export partners seriously impacted the domestic manufacturing sector in the fourth quarter of last year, and economists do not expect the picture to alter much for the rest of this year.
According to GDP data published by Statistics South Africa (SSA) on Tuesday, in the final quarter of 2008 the manufacturing sector contracted by an annualised 21.8%.
"Manufacturing is going to have a very difficult year," said Mike Schüssler, economist at Economists.co.za.
"Vehicles sales offshore have a lot to do with the lower manufacturing figures," commented Razia Khan, economist at London bank Standard Chartered. "The collapse of new vehicles sales elsewhere in the world has had a massive impact on South African manufacturers."
She reckons the prospects for the local manufacturing sector are by no means rosy, and that the combined interest-rate cuts of 1.5 percentage points announced in December and February will have no effect in the short term.
"It will take at least nine months to a year before the interest-rate cuts will benefit industries," she points out.
Falling production in the manufacturing sector will necessarily lead to large-scale job losses. According to the latest figures from SSA, South Africa has an unemployment rate of 23.2% - among the highest for middle-income countries.
"There are 1.4m workers in the manufacturing sector of the economy," says Schüssler, "and I expect about 100 000 to lose their jobs there."
Khan reckons that is a reasonable estimate.
Out of a formal workforce of nine million South Africans, this means that one out of every 100 workers will be without an income, while one out of every 14 in the manufacturing sector will have to find an alternative means of livelihood.
- Sake24.com
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