Moody's: SA to grow despite strikes

2010-05-31 12:59

Johannesburg - Work stoppages in transportation and a "troubled labour market" in South Africa will weigh on the economic rebound, according to Moody's Analytics, a division of economic and research unit Moody's Corporation.

South Africa recently experienced an almost three-week crippling strike action by transport utility Transnet workers that is estimated to have cost the economy over R7bn.

"Work stoppages in the transport industry will likely weigh on growth in the second quarter by crippling activity in agriculture and other export-oriented industries," the report said.

Despite these factors, Moody's Analytics still expects the economy to grow by around 3% this year, boosted by the export-oriented manufacturing and a substantial monetary stimulus.

"A number of industries that supported the early stages of recovery will lost momentum but are not anticipated to become drags on the economy," the report added.

While others remain confident that the eurozone recovery is fragile but on the mend following multi-billion US dollar bailouts, Moody's Analytics held a different view.

"We expect the eurozone recovery to falter by the end of the year, sending Europe back into a moderate recession," the report concluded.

   - I-Net Bridge