Protracted platinum strike pushes SA towards recession

2014-05-27 16:54

Multimedia   ·   User Galleries   ·   News in Pictures Send us your pictures  ·  Send us your stories

South Africa’s economy shrank in the first quarter of this year, the first quarterly contraction since a recession five years ago, as mining output plummeted due to a protracted strike in the platinum sector.

The economic decline presents a challenge for new Finance Minister Nhlanhla Nene, appointed this week to steer an economy that has struggled to grow by more than 2% annually or generate many new jobs since the 2009 recession.

The weak data also undermines the case for more interest rate hikes this year after the central bank lifted its benchmark rate by 50 basis points in January, although it remains concerned about rising inflation pressures.

Gross domestic product shrank 0.6% quarter on quarter in the first three months of the year after a 3.8% increase in the final quarter of 2013, Statistics South Africa said today.

GDP was dragged into negative territory by a 24.7% plunge in mining production and a 4.4% fall in factory output.

On an unadjusted year-on-year basis, GDP was up 1.6% in the first quarter compared with 2% previously.

Mining and manufacturing account for about a fifth of South Africa’s economy, but have been plagued by strikes in the past few years.

The current mining strike, over wages and now in its fifth month, is the costliest and longest in South Africa’s history.

The first quarter decline in mining output was the steepest since 1967 due to stoppages at the country’s platinum mines, which normally account for 40% of global production of the precious metal.

Economists polled by Reuters had expected GDP in South Africa – recently overtaken by Nigeria as Africa’s biggest economy – to contract by just 0.1% quarter on quarter while expanding 1.9% compared with the same period last year.

“With industrial unrest still continuing, there is little hope for a robust recovery in mining output in the second quarter in 2014,” Standard Chartered analyst Razia Khan said.

“The challenges for the South African economy persist.”

Join the conversation! encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions. publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24


Book flights

Compare, Book, Fly

Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.