South Africa’s economic growth is at risk of slowing from the weakest pace since the 2009 recession if labor union unrest that has halted mining production continues, the National Treasury said.
“If the disruption is sustained, there’s no doubt about it, it will impact on growth,” Lungisa Fuzile, director general of the National Treasury, said on Johannesburg’s state-owned SAfm radio today. “If we able to avert it, and I think we will, then we stand a good chance that if it impacts on growth at all, the impact will be negligible.”
Labor unrest that started at platinum mines in August spread to gold, iron-ore, chrome and coal producers with farmworkers and truck drivers also joining protests last year. Mining strikes caused more than 10 billion rand in lost output and shaved about 0.5 percentage point off gross domestic product, according to the Treasury. GDP growth slowed to an annualized 0.9 percent in the fiscal first quarter from 2.1 percent in the fourth.
The rand has lost 16 percent against the dollar this year, making it the worst performer among 16 major currencies tracked by Bloomberg. The currency fell as much as 0.9 percent to 10.1256 per dollar and was trading 0.3 percent weaker by 8:46 a.m. in Johannesburg today.
“There needs to be absolute stability around mining,” Fuzile said. “You need stability to increase confidence in our economy, the ability of South African to manage their own affairs.”
Rivalry between the National Union of Mineworkers and the Association of Mineworkers and Construction Union is part of a judicial inquiry into the death of at least 44 people near Lonmin Plc (LMI)’s Marikana operations, of which 34 were killed by police. The assassination of an AMCU official at the mine on May 10 led to a two-day walkout. Glencore Xstrata Plc, the world’s fourth-biggest mining company, said production at three South African chrome sites has been disrupted by unauthorized strikes since May 28.
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