South Africa's manufacturing, mining subdued as growth burden shifts to central bank

11th July 2019

By: Reuters

  

Font size: - +

South Africa's manufacturing output grew only slightly in May while the slump in mining continued, albeit more moderately, shifting attention back onto the central bank to stimulate growth in an economy bleeding jobs.

Factory output rose 1% year-on-year in May while mining production fell 1.5% for the month, Statistics SA said on Thursday.

The two sectors account for about a quarter of gross domestic product and are large employers, but both sectors have struggled due to a combination of power cuts, low investor confidence and political uncertainty.

The first half of 2019 saw growth in Africa's most industrialised economy shrink by the most in a decade and risks of a credit downgrade to full subinvestment grade rise even after the election of business-friendly President Cyril Ramaphosa in May.

Slack growth has seen calls for the Reserve Bank (SARB) to focus more on economic growth and jobs grow louder, with treasury and senior officials in the ruling African National Congress (ANC) publicly wrangling over the central bank's mandate.

The bank is set to cut interest rates by a quarter of a percent next week, a Reuters poll showed on Thursday, but its own policymakers as well as analysts doubt whether rate cuts will have an impact on long term growth.

"A 25 basis point cut will have a limited impact on the economy. It's more of a reversal of the rate hike we saw in November. Unfortunately, the issues this economy faces are structural rather than to do with monetary policy," said Jeffrey Schultz of BNP Paribas.

On Tuesday central bank Deputy Governor Kuben Naidoo said weak growth and the resulting rise in public debt and budget deficits had introduced risks which had to be taken into account by monetary policy, but that ultimately it was fiscal policies that would see growth return.

Edited by Reuters

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION