Mining, Manufacturing Pull Down South Africa Economic Growth
Tag: South Africa Economic, South Africa Economic Growth
Summary: As mining and manufacturing company growth slumps, consumer spending and the financial sector have been the major source of South Africa’s tepid growth.
As mining and manufacturing company growth slumps, consumer spending and the financial sector have been the major source of South Africa’s tepid growth.
This assertion was made today by the South Africa’s Reserve Bank in its annual review of the South Africa’s economy in 2011 and the first half of 2012.
According to the South African Reserve Bank, “Growth has remained pedestrian as the South African economy continued to be characterised by levels of activity significantly below potential.”
It stated that South Africa’s economic growth averaged 3 percent from the start of 2011 through March of this year. This it said, is “far below the rates required to make strong inroads into the high level of unemployment in the economy.”
South Africa’s unemployment rate stands at 25.2 percent.
Mining and manufacturing were the only sectors of the economy not to add jobs in 2011, the report said.
The bank report also revealed that the mining and manufacturing sector has been particularly disappointing as the mining industry contributed 0.3 percent to South Africa’s Gross Domestic Product (GDP) expansion in 2010 and virtually nothing in 2011while growth in the manufacturing sector fell from 5.4 percent in 2010 to 2.4 percent in 2011.
The bank report indicated that the mining sector contracted 16.8 percent in the first quarter of this year.
It ascribed the fall in the mining industry quota to the labour dispute by the platinum miners and the gold miners struggle in unearthing deeper and lower-quality deposits. The entire industry is facing lower commodity prices, the report said.
Rising wages and strikes are also blamed as the reason for the low recorded in the manufacturing sector.
Other turmoil faced by the South African economy as stated by the bank include the devaluation of the Rand as a result of investors reaction to the risks posed by the European debt crisis which makes it difficult for producers to hedge their imports and exports.
Meanwhile, the Reserve Bank Governor Gill Marcus has lowered the bank’s forecast for growth this year to 2.7 percent from 3.1 percent.