The South African Reserve Bank remains concerned about the effects of strikes on the economy, the bank’s governor Gill Marcus said.
It’s encouraging that strike action has been “largely peaceful and legal” this year, compared with “a series of unprocedural and violent strikes” in 2012, Marcus said in a speech to diplomats in the capital, Pretoria, a copy of which was published on the bank’s website late yesterday.
Thousands of South African workers downed tools in wage disputes in the mining, manufacturing and construction industries in August and September. Strikes shaved 0.5 percentage point off economic growth in 2012 and President Jacob Zuma said in June they have reduced economic growth this year by 0.3 percentage point.
Marcus reiterated that the bank faces the dual challenges of slowing growth and increasing inflationary pressures. The Reserve Bank kept its benchmark interest rate unchanged at 5 percent for a seventh consecutive meeting on Sept. 19.
A 16 percent decline in the value of the rand against the dollar this year is adding to price pressures in Africa’s biggest economy by boosting import costs. The currency fell 0.2 percent to 10.1381 per dollar by 8:25 a.m. in Johannesburg.
Consumer prices rose 6.4 percent in August, exceeding the bank’s 3 percent to 6 percent target band for a second consecutive month. The bank predicts the inflation rate will drop below 6 percent by the end of the year.
“The bank will continue to take the necessary steps to anchor inflation expectations and achieve price stability within our mandate of flexible inflation targeting,” Marcus said.
The central bank forecasts gross domestic product in Africa’s largest economy will expand 2 percent this year, the slowest pace since a 2009 recession.