Numsa strike threatens SA’s credit rating – Moody’s

2014-07-03 13:17

South Africa’s credit rating is at risk as strikes by miners and metal workers threaten economic growth and the government’s ability to rein in debt, says Moody’s Investors Service.

A strike by 220 000 National Union of Metalworkers of SA (Numsa) workers that began on Tuesday may curb a third of output in manufacturing, Moody’s said in a report today.

It follows a five-month strike in the platinum industry that ended last week. This caused the economy to contract in the first three months of the year.

“Continued weak investment, exports and overall growth will pose serious challenges to the government’s efforts to rein in its budget deficit and stabilise its debt metrics, a credit negative for the economically troubled country,” said Moody’s.

Moody’s has had a negative outlook on South Africa’s Baa1 credit rating since November 2011. This is two levels above Standard & Poor’s, which downgraded the country’s debt on June 13 to BBB-, the lowest investment grade level.

The strikes are making it difficult for South Africa to take advantage of a recovery in growth in its main trading partners like Europe, Moody’s said.

Finance Minister Nhlanhla Nene said the economy would probably miss the government’s 2.7% growth target this year because of the stoppages.

Numsa will resume wage talks tonight with the employers’ group, said union spokesperson Castro Ngobese said.

Numsa wants increases of 12% in metals and engineering and at Eskom.

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