Marcus sounds warning on SA economy
Reserve Bank Governor Gill Marcus has warned that South Africa's economic outlook is deteriorating rapidly, with strikes likely to lead to job losses.
Speaking to economics students in Grahamstown in the Eastern Cape, Marcus also warned that the country faced a loss of confidence, underlined by a sharp fall in the currency.
But she reiterated her stance that the central bank had no target level for the rand.
A heavy fall in the currency on Monday to within a whisker of R9 to the dollar had prompted market speculation of official intervention. Marcus said it was simply too costly for a medium-sized emerging economy such as South Africa to step into currency markets.
"The daily turnover in the rand is around $25-billion, so if you want to look at where you can manage this currency to, you're going to whistle," she said.
"We've got in total $50-billion in reserves – not like China which has trillions of dollars in reserves. They can do these things."
Two months of violent, wildcat walkouts in gold and platinum mines, including the police killing of 34 strikers at Lonmin's Marikana mine on August 16, have hurt South Africa's international investment reputation, Marcus said, citing R5.6-billion in net equity market outflows on Monday as evidence.
"That's an indicator of a loss of confidence. It's a huge indicator for us of loss of confidence," Marcus said.
"The outlook at the moment is deteriorating rapidly and if you look at the deficit of confidence, it is one of the reasons why it's very difficult to find a resolution," she said.
Besides the mining problems, a strike by more than 20 000 truckers is now in its third week, hitting fuel supplies around Johannesburg and affecting production at some car plants on the South Coast.
Talks between the main transport union, Satawu, and freight employers broke down on Tuesday, and the transport strike is due to widen next week with a one-day "sympathy" stoppage by port and railway workers.
The rand has recovered marginally since being beaten to three and a half lows on Friday and Monday, and touched R8.64 in early trade on Wednesday. However, it pared nearly all its gains in the wake of Marcus's comments, retracing to R8.72 by 10.16am. – Reuters