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Market Brief - Africa Economic Financial Brief 08-12 July 2013
South Africa has been suffering from a series of wildcat strikes in the country’s strategic mining sector since 2012. This sharply affected the country’s economic growth in 2012. Due to unrest and union strikes in the mining sector, South Africa’s GDP growth fell to 2.5% in 2012 from 3.5% in 20111 . Recently, as a new wave of strikes hit the country, some analysts began questioning how the economy can withstand these events over the long term. With the unemployment rate as high as 25% and growing income inequalities, a new round of labor unrest may further lead to a deterioration of the situation and jeopardize GDP growth.
Gold and platinum production has been affected the most since 2012 (see figure 1 below). Gold and platinum are, respectively, the first and third largest contributors to South Africa’s export revenues. The mining strikes began at Lonmin’s platinum mines in August 2012 before spreading to other mines including those of Anglo American Platinum, AngloGold Ashanti, Gold Fields and Harmony Gold Mining. During the six-week strikes in the Lonmin mines, the country was hit by the deadly clashes which caused 46 deaths, 34 of which were allegedly caused by the police. More recently, labor strikes spread to most economic sectors including transport and textiles.