Economic outlook subdued by mining unrest

2012-09-07 08:57

Johannesburg - South Africa’s economic growth will remain subdued in the medium term due to unrest in the platinum sector and a weak global economic environment, a Reuters poll showed on Thursday.

Economists kept their median forecast for growth of 2.5% this year, after trimming it in last month’s poll, but some in the poll of 17 analysts were more bearish, projecting only a 2.2% expansion.

South Africa is the world’s top platinum producer and its mining sector is being hit by labour unrest, most recently fuelled by outrage over the police killing of 34 striking miners last month at Lonmin’s Marikana mine.

The Reserve Bank has reduced its 2012 growth forecast to 2.7% from 2.9%.

"The strike in the mining industry seems to be spreading. I think Q3 is going to be a little a bit worse, so maybe expect a contraction there," said Collen Garrow, an independent economist at Meganomics.

Africa’s biggest economy accelerated in the second quarter, growing 3.2% on a quarter-on-quarter basis, boosted by a surprise jump in mining as miners returned to work after strikes and stoppages at the start of the year. Gross domestic product rose 3% from a year earlier.

However, more strife at Lonmin’s Marikana mine, and the fatal shootings on August 16 present a big setback.

On Wednesday, more than 3 000 striking platinum miners marched through streets near Marikana, the largest protest at the hot spot since the killings.

The mining sector, which accounts for 6% of gross domestic product, has been repeatedly hit by disputes over low wages that reflect widespread anger over enduring inequalities in the economy.

The poll expects interest rates to remain unchanged for this year and next year at a 40-year low of 5.0%. It then sees them rising by 100 basis points by the end of 2014.

Seven of the 17 economists polled saw a chance that the Reserve Bank will cut interest rates again by another 50 basis points before the end of the year to offset the effects of sluggish growth in Europe.

Inflation forecasts were nudged slightly lower to 5.54% this year from 5.58% in the previous poll. They were also lowered for the next two years.

The main Econometer confidence index fell to 256.52 in August from 261.78 the previous month.

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  • Joubs1957 - 2012-09-07 09:26

    I wonder if Malema is even aware of or if he understands these kind of statistics - i doubt it. This is unfortunately the reality of what that moron and his cronies are instigating. - Bananafarians

      janhendrik.vanstaden.7 - 2012-09-07 10:58

      O he is to aware of these stats. But unfortunately he is short sighted and has the view of Mugabe. He doesn't care if his fellow countrymen suffer. As long as he have no international power in his country. Malama is trying to get Lonmin out of the country. The demand was clear. Close the mine or we will kill you and burn it down. He is a dictator and will use any disruption to help him strengthen his position.

      claudia.meads - 2012-09-07 11:30

      Joubs1957 The reality is: Juju is as much a product of Polokwane 2007 as is SA's current woes. The ANC manic nationalism under its brand of Afro-Fascism is the polarizing hatred that is the underlying impetus of the strikes. Malema is simply a by-product of a much bigger cause.

  • seun.mogotji - 2012-09-09 17:44

    While admitting that nothing has changed since the demise of Apartheid, however, I beg to differ with a notion that Marikana is a reflection of poverty and inequality. Marikana is a reflection of lack of service to union members by their union (in particular Num, an affiliate of Cosatu). Mineworkers complain about how their union (Num) has been aloof and colluded with the employer in most cases. This being a material fact between the parties, I find it therefore vague and embarrasing that Vavi went on to plead extraneous issues when the dispute is purely industrial. It is therefore adviceable for Vavi and Num to deal with real issues affecting them than throwing a red herrings everytime they are found wanting.

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