Kganyago: SA at risk of recession

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Lesetja Kganyago111 Independent Newspapers Deputy central bank governor Lesetja Kganyago.

Johannesburg - The 18-week strike in South Africa’s platinum industry will curb output in the second quarter and possibly push the economy into recession, central bank Deputy Governor Lesetja Kganyago said.

“We can’t say we are definitely going into a recession,” Kganyago told reporters in Johannesburg today.

“There is a possibility, given that we are already two months into the second quarter.”

Africa’s second-largest economy contracted an annualised 0.6 percent in the first three months of the year as a strike shut mines owned by Anglo American Platinum, Impala Platinum and Lonmin.

Mining production plunged 24.7 percent in the period, the biggest decline since 1967.

The effect of the strike on gross domestic product shows the importance of the mining industry to the economy, Kganyago said.

Manufacturing, which contracted 4.4 percent in the first quarter, may rebound in the second quarter, he said.

“The impact of the slowdown in economic activity should be of concern to us as a country that is facing the challenge of dealing with an unemployment situation,” Kganyago said.

“The social impact of a slowdown in economic activity is actually a very important one.”

South Africa’s jobless rate of 25 percent is the highest of more than 40 emerging markets tracked by Bloomberg.

The Reserve Bank left its benchmark repurchase rate at 5.5 percent on May 22 as concerns about a slowing economy outweighed worries about inflation, which breached the bank’s 3 percent to 6 percent target band in April. - Bloomberg News



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