Mining sector reels as demand slows

The bloodbath in the mining industry and other sectors of the economy has pushed the South African economy to contract during the first quarter of the year.

Statistician-General Pali Lehohla yesterday refused to be drawn on whether the 1.2% negative growth would drive the country into a recession.

South African Reserve Bank Governor Lesetja Kganyago said earlier that it would be difficult to forecast another revised economic growth rate for the country.

The Reserve Bank said a few weeks ago it was revising South Africa’s growth rate from 0.9% to 0.6% this year.

This was due to the poor performance of the economy.

But Lehohla, who released the GDP (gross domestic product) figures, said the meltdown in the mining sector and other industries led to the 1.2% fall in the economy. Lehohla said mining and quarrying dropped by 18.1%. This was due to lower demand for South African commodities.

The mining industry has shed thousands of jobs in the past few months, with thousands more on the line.

Lehohla would not commit on whether the latest figures indicated an imminent threat of a recession.

“We can’t say we are heading for a recession; that we do not know. We can measure year-on-year performance of the economy. It is difficult to measure what is going to happen in the future, I wish we could,” he said.

He added that mining had taken a battering, more than most industries.

But other sectors of the economy also plummeted, with agriculture dropping 6.5% and electricity 2.8%. Transport, storage and communication declined by 2.7%.

“The global demand for things we produce is flat. There are no preferences for South African products, the global demand is just flat,” said Lehohla.

The slowdown in demand for South African products had been the main factor in the negative growth rate.

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