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Economy subdued by extended strikes

Cape Town – The chief economist for economists.co.za, Mike Schussler, says May or June may show more subdued economic activity due to the backlash of extended strikes.

He was commenting on BankservAfrica's Economic Transaction Index (BETI) that showed annual growth slowed to only 0.2%  last month.

The CEO of the electronic payments transaction company, Brad Gillis, said on Wednesday that not even the pre-election spending of political parties could put momentum back into the economy.

Massive

"The 0.2% year-on-year growth in April 2014 showed one of the smallest changes in economic activity over the last year," he said.

"On top of that, five of the last eight months indicated a month-on-month decline and only three, including April, showed an increase," said Gillis.

Schussler said political parties only spent on a massive scale once every five years and some of this spend could show in the April figures.

Referring to the strikes, Schussler said: "In the past, the effect of a strike was mostly felt a month or two after the strike ended.

Growth

“On top of this, the economy is running the risk of negative growth as a result of high consumer debt levels and the inability of the economy to create new jobs."

Schussler said businesses struggled with the pace of economic change.

On an international front, the South African economy would feel the effects of the recent lowering of growth figures for most countries by the Organisation for Economic Co-operation and Development.

"It seems the whole economy is caught between strikes and slow international growth," he said.

Gillis said although the Beti took public holidays into consideration, they alone could not be used as an explanation because businesses no longer closed shop on these days.


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