SA at risk of recession, says Deputy Reserve Bank Governor

After South Africa’s latest GDP figures showed that Africa’s second-largest economy shrank by an annualised 0.6% in the first three months of the year, SA Reserve Bank Deputy Governor Lesetja Kganyago warned of the possibility of South Africa slipping into recession. In response to the numbers the Reserve Bank left its benchmark repurchase rate at 5.5% on May 22 as concerns about a slowing economy outweighed worries about inflation, which breached the bank’s 3%-to-6% target band in April.

The main culprit blamed for slowing the economy has been the 18-week miners’ strike which has brought all platinum mining to a standstill. Mining production plunged 24.7% in the period, the biggest decline since 1967. Kganyago said the effect of the strike on gross domestic product shows the importance of the mining industry to the economy. He went on to say that the impact of the slowdown was of concern in a country with a jobless rate of 25%, the highest of more than 40 emerging markets tracked by Bloomberg.