Manufacturing slowed in December and mining output also fell, official data showed, fanning concern the economy’s two main power consumers will suffer from electricity constraints this year, Business Day reported on Wednesday.
At the same time, the Bureau for Economic Research (BER) warned that power shortages may trim the pace of economic growth to 3,4% this year, from 5% over each of the past four years.
The effect of power outages on mining production — which has fallen for two years in a row — would to a large extent determine the severity of SA’s economic slowdown this year, the BER said.
The bureau predicts that output from the sector — hardest hit by a 10% mandatory cutback in power use — will subside by either 1,7% or 4,8% this year, depending on how quickly it rebounds from a 20% contraction in the first quarter of the year.
”The list of negative growth factors has increased significantly following unprecedented mining shutdowns in January,” BER economist Hugo Pienaar said.
He was referring to a five-day shutdown last month after Eskom was forced to cut electricity to mines.
Mining directly accounts for just 5,5% of gross domestic product (GDP), but its indirect effect amounts to 18%, through links to other sectors — especially manufacturing, the economy’s second-biggest sector. It also accounts for about 60% of export revenue and employs about half a million people.
Factory production — which accounts for more than 16% of GDP — edged up by an annual rate of 0,3% in December, its second-lowest reading in 20 months, figures from Stats SA showed.
Compared with November, output fell 2,5%, the second monthly decline in a row.
Economists believe the sector emerged from a recession in the final quarter of last year. But the effect of higher interest rates on consumer demand and the cost of rising inflation will continue to take a toll on manufacturing. – Sapa