S.Africa growth slumps to 1.5% in 2014
South Africa's growth rate fell to 1.5 percent in 2014, 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 the previous year, 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,” Statistics South Africa 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 the millions without work a country where one in four people are officially unemployed.
It also leaves the country a laggard in the sub-Saharan Africa region, which according to IMF likely turned in 4.8 percent growth.
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 this 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 that quarter, though the year-on-year growth was negative.
“Hopefully we can keep the strength and avoid any strike action or stoppages,” he said.
The continent’s most developed economy has been wrestling with a host of troubles, including rolling electricity blackouts that have hobbled the manufacturing industry.
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.
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.