Strike bad for growth – Treasury

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A four-month strike in the platinum belt was hampering growth and threatening efforts to narrow South Africa’s current account deficit, Lungisa Fuzile, the director-general of the National Treasury said this week.

“We are always concerned about growth,” he said at the African Development Bank’s annual meeting in Kigali. “The signs for the first quarter are not pointing towards a very strong rebound.”

The strike by more than 70 000 workers at Anglo American Platinum, Impala Platinum and Lonmin has halted most output and led to a 4.7 percent slide in mining output in the first quarter. Growth might slow to an annualised 2.3 percent in the first quarter from 3.8 percent in the prior three months, a survey of 26 economists found last month.

The stoppage was worrying, Fuzile said, especially when “it occurs at a time when the current account deficit is hovering at about 5 percent of gross domestic product. Striking is part of the labour relations processes, but when strikes get protracted or violent, those developments are cause for concern.”

The deficit on the current account, the broadest measure of trade, and high unemployment were factors cited by Moody’s Investors Service when it cut its rating one level to Baa1, the third-lowest investment grade, in September 2012. – Bloomberg

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