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Sarb sees strikes curbing growth

Oct 30 2012 19:43 AFP

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Johannesburg - The South African Reserve Bank warned that a raft of mining strikes would likely curb economic growth for the rest of the year, in a report published Tuesday.

The central bank said strikes, which have hit vital gold, platinum and coal production, coupled with weaker performance in the industrial sector would trim output.

"Recent volatility in the mining sector and a weaker secondary sector suggest lower output growth for the economy as a whole in the third and likely fourth quarters of 2012," the bank's regular Monetary Policy Review said.

The comments came just weeks after the bank revised its 2012 forecast down to 2.6%.

As the outcome of the strikes remained unclear, the bank attempted to chart the possible impact across labour, equities and other markets.

It noted a "strong" flow away from South Africa shares by foreign investors.

"Concerns over developments in the mining sector appear to be a primary factor behind strong sales of South African equities by non-resident investors," it noted.

For the labour market, it said generous miners' wage deals could fuel inflationary pressures -- which are already being affected by rising petrol prices.

"Recent high wage settlements in the mining sector could set a precedent for wage settlements more generally," the bank warned.

Against a bleak domestic backdrop, Africa's largest economy also faced headwinds from abroad.

"Global economic growth momentum has moderated... market volatility remains high and negative spill overs to real economic activity and confidence are likely to continue in coming months."

"The probability of future growth and financial shocks from global developments remains high and further risks are likely to be on the downside."
sarb  |  mining unrest  |  sa economy
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