Weaker than expected mining results may drag GDP down
As the African Mining Indaba draws to a close today, the sector recorded strong year-on-year growth in 2017, however its weak momentum may wear on South Africa’s gross domestic product (GDP), says chief economist at Econometrix Azar Jarmaine.
“They are very much worse than expected, there was a shock for the fall in the production of platinum and platinum group and also a substantial decline in coal production, I am not sure what the causes of those were but the devil is in the mining output and clearly the GDP growth rate is not going to be particularly good,” he told the Mail & Guardian.
According to the latest StatsSA mining results, production increased by 0.1% in 2017, driven mainly by iron ore and gold.
Although the results show that total mining production was 4% higher in 2017 compared to a 4% decline in 2016, seasonally adjusted mining production decreased by 3.1% in December compared with November 2017.
This followed a month-on-month low of -1.1% in November and 3.0% in October last year, according to StatsSA.
“The fall in mining production on its own could knock GDP growth down by one and half percent, if we were looking at 1%, then the GDP growth figure could turn up to negative for the fourth quarter and the full-years growth will not reach the 1% that we had expected,” Jermaine explained.
The monthly mining production and sales survey is conducted by the department of mineral resources, using results calculating the volume of mining production indices in order to estimate the GDP and its components.
These results follow comments from a leaked recording of ANC’s treasure general Paul Mashatile addressing investors on the sidelines of the Mining Indaba concerning President Jacob’s future. In the recording Mashile is heard saying that President Zuma “deserves a farewell party but this should not be the Sona”.
This has left the rand trading at R12.30 from just under R12.00 yesterday before noon..