WAGE DEMANDS: Lonmin mine workers demand wage increases as analysts warn the ructions in platinum mining can jeopardise growth. Picture: Thapelo Morebudi
Sibonelo Radebe and Reuters
The South African economy displayed remarkable resilience during the second quarter of this year, posting a 3.2% GDP growth but analysts have cautioned that this level of growth was unlikely to be sustained due to the crisis sweeping through the country’s platinum mining industry.
Statistics SA (Stats SA) figures released yesterday showed the economy growing at an annualised rate of 3% with expectations that the 2012 growth would still rest around 2.5%.
The GDP performance in the second quarter was faster than the 2.7% recorded in the first quarter and came to defy expectation that economic growth would slow down significantly as a result of economic problems visiting the eurozone region.
Earlier projections had put GDP growth in the second quarter around 2.5%, raising alarm, given the fact that South Africa needs to achieve growth in the region of 7% to dent its stubbornly high joblessness.
Realising that an unemployment rate of about 25% is dangerously high, the government is on a drive to boost economic growth to higher levels but initiatives have been constrained by several internal and external factors.
Achieved on the back of an ailing global economy, the second quarter growth of 3.2% is considered to be satisfactory. “On the day, it is good news,” said Elize Kruger, economist at Kadd Capital.
“The impact of the mining sector should be noted because that is off a very low base in the first quarter. What is happening to the mining sector lately might end up being a reversal of this number in the third quarter.”
Stats SA figures showed the recovery of the mining sector output during the second quarter played a significant role in propelling economic growth.
This recovery came after the sector had suffered major production glitches, partly due to earlier labour unrest and safety-related stoppages. .
Reaction from the Nedbank Economic Unit said: “The main reason for the better performance was a 31.2% improvement in mining activity, following the strike-affected 16.8% first quarter contraction. Other areas that saw improvement included agriculture which was up 5.8%, finance (2.3%), wholesale and retail trade (2.8%) and construction (4.3%). The manufacturing sector contracted by 1% and electricity by 4.2%”.
The Nedbank statement said the economy was still expected to grow by 2.5% overall for 2012.
“Agricultural production will continue to rise during the remainder of the year, but mining will come under renewed pressure due to a weak global economy and disruptions following the Marikana crisis. Manufacturing will also continue to be hurt by weak external demand.
“Consumer-oriented sectors will see continued growth but at a slower pace as disposable income moderates due to higher inflation and a stagnant jobs market.”
Going forward, the mining sector is a major cause for concern. The Marikana massacre which left 44 miners dead following industrial action at a Lonmin operation has disturbed production for an extended period with no sign of a sustainable solution in the near future.
Anisha Arora, an emerging market analyst at 4Cast, said: “The initial breakdown sees mining up 31.2% quarter on quarter and is the first credible expansion since the end of 2010.
“South Africa has held off from a recession, but we do expect weakness on the horizon and even the Reserve Bank cut its 2012 growth forecast to 2.7% from 2.9% at the July rate meeting.
“The latest GDP figures were in line with expectations and are unlikely to have implications for monetary policy in the short term,” said Nedbank.
“The Bank’s monetary policy committee is likely to maintain its accommodative monetary policy stance in the months ahead until there is clearer direction on the global outlook and the local economy starts looking less vulnerable. With the inflation outlook likely to start deteriorating once the effects of the weaker rand and higher food and oil prices start to filter through, we think the MPC will keep interest rates on hold rather than ease further.”
» GDP grows by 3.2% in Q2
» GDP grew by 2.7% in Q1
» Strong mining output boosted economy
» Mining activity grew by 31,2 %
» Manufacturing sector contracted by 1%