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Johannesburg. – A four-month strike in South Africa’s platinum mining industry is hampering growth and threatening efforts to narrow the current-account deficit, according to Lungisa Fuzile, the director-general of the National Treasury.
“We are always concerned about growth,” he said in an interview yesterday at the African Development Bank ’s annual meeting in Rwanda’s capital, Kigali.
“The signs for the first quarter are not pointing towards a very strong kind of rebound.”
A strike by more than 70 000 workers at Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Lonmin Plc halted most output and led to a 4,7 percent decline in mining production in the first three months of 2014. Mining accounts for about two-thirds of exports from South Africa, the largest platinum producer.
Growth may slow to an annualised 2,3 percent in the first quarter from 3,8 percent in the prior three months, according to a Bloomberg survey of 26 economists in April.
The work stoppage is worrying, especially when “that occurs at a time when the current-account deficit is hovering at around 5 percent of gross domestic product,” Fuzile said.
“Striking is part of the labor relations processes, but when the strikes get protracted or somewhat violent, then those developments are cause for concern.”
The deficit on South Africa’s current account, the broadest measure of trade in goods and services, and high unemployment were among factors cited by Moody’s Investors Service when it cut the nation’s creditworthiness one level to Baa1, the third-lowest investment grade, in September 2012.
The strike will delay a contraction in the shortfall, Moody’s said on May 16, after the gap narrowed to 5,1 percent of GDP in the fourth quarter of 2013 from 6,4 percent the prior three months. – Bloomberg.
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