S.Africa growth slumps to 1.5% in 2014
South Africa's growth rate fell to 1.5 percent last year, official data showed Tuesday, as strikes and power cuts hobbled Africa's second-largest economy.
The preliminary 2014 figure announced by Statistics South Africa is below the 2.2 percent growth recorded a year earlier, largely the result of persistent strike action in the mining sector.
“Due to a lot of industrial strikes, I think it had a quite negative impact on the economy,” the statistics agency’s manager of national accounts Gerhardt Bouwer told reporters in Pretoria.
The growth rate is far below the 6 to 7 percent most economists believe South Africa needs to provide jobs for millions in a country where one in four people is officially unemployed.
It also leaves the country a laggard in the sub-Saharan Africa region, which according to the International Monetary Fund likely turned in 4.8 percent growth last year.
However, South Africa’s gross domestic output (GDP) expanded by a much stronger 4.1 percent in the fourth quarter of last year — a change Bouwer attributed to industries going “back to normal” at the end of the year.
This was evident in the manufacturing and mining sectors, which rose 1.2 and 1.1 percentage points respectively in the fourth quarter, though the year-on-year growth was negative.
“Hopefully we can keep the strength and avoid any strike action or stoppages,” he said.
It was a hope economists greeted skeptically.
“Until we deal with the issues in the labour market, the risk of these sorts of disruptive strikes remain,” said Nedbank senior economist Nicky Weimar.
The continent’s most developed economy has been wrestling with a host of troubles, including rolling electricity blackouts that have hobbled manufacturing.
In 2014, the main contributors to the economy were general government services, finances and real estate, while mining recorded a “negative contribution,” said Statistics South Africa.
The government had set an official expansion target of 2.7 percent in last year’s February budget, but that was later slashed to 1.4 percent.
Speaking before parliament last week, President Jacob Zuma sought to downplay the domestic issues that have hit the economy, noting instead that South Africa couldn’t be expected to grow at the same rate as its less developed neighbours — but said his country could be doing better.
“While it is unrealistic to expect South Africa to grow at levels seen in some of the countries in the region with lower levels of gross domestic product (GDP) per capita or low levels of development, we definitely have the potential to grow at much higher levels than the current level,” he said.
South Africa’s finance minister has warned the country’s economy is at a “turning point”, arguing the government must cap spending and raise taxes to tackle its soaring deficit in the face of stalling growth and high unemployment.
Nhlanhla Nene will present the national budget to parliament Wednesday, with investors hoping he will introduce reforms to boost revenue.