The nation’s jobless rate is through the roof, the likelihood of more credit rating downgrades is increasingly, and now recent reports have demonstrated that South Africa’s pace of growth is at a three year low. The country’s Reserve Bank may even need to lower its growth forecast again, despite cutting it to 2.6 per cent last month.
The 25 per cent jobless rate is one of the country’s main concerns and unfortunately it seems set to increase. The well laid plans of South African President Jacob Zuma to cut the jobless rate to 14 per cent over the next eight years may well be kicked to the curb if the mass dismissal of striking miners continues.
Since Augusts’ shocking clash between miners and police, in which over 30 miners were killed, illegal mining strikes have spread around the country.
In light of recent developments one industry expert commented: ‘If you assume some of the mining companies are going to have to cut costs because of the longer-term effects of the salary increases, it’s not unrealistic to estimate we could lose between 55,000 and 70,000 jobs in the short to medium term.’
Earlier this month 12,000 workers with Anglo American Platinum Ltd were let go, and a further 13,800 miners with Gold Fields Ltd could lose their jobs by the end of the day if they fail to return to work.
Earlier this week an economist with the Johannesburg branch of Morgan Stanley informed clients that up to 85,000 South African jobs may be lost this year. Furthermore, according to Mike Schussler – a top economist with an independent research group – the unemployment rate could continue to exceed 25 per cent for the next few years.
Schussler commented that over the course of next year a ‘meaningful amount’ of jobs could be lost. He then asserted: ‘To carry on like this, we are destroying the future of our country’.
The economy is certainly bearing the brunt of all this upheaval. Investor confidence is at a low, the Rand has recorded losses against the majority of its currency rivals and top ratings agencies Moody’s and Standard & Poor’s lowered the credit rating for Africa’s largest economy, citing political risk and shaky finances as the cause.
Now growth in South Africa could slump to the slowest pace seen since the recession in 2009.
The median estimate compiled by economists participating in a Bloomberg survey put growth for the year at 2.3 per cent. This figure is 0.2 per cent lower than that recorded in August before the strikes began and could potentially drop even lower if the situation fails to improve soon.
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