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South Africa strikes hit rand

Wednesday, October 10, 2012 - 02:06

Oct.10 - After two weeks of labour unrest in the transport sector and ongoing mining strikes, manufacturing in South Africa is now starting to feel the pain. Joanne Nicholson reports

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The wildcat strikes started in South Africa's platinum mines, resulting in violence. Then 12,000 of these Anglo Amercian workers were fired. Large parts of the massive mining industry remain shut. Unrest has also hit other sectors - 45 per cent of domestic manufacturers use mining based products Economist Mohammed Nalla from Nedbank Capital says the consequences could be serious. (SOUNDBITE) (English) NEDBANK CAPITAL, ECONOMIST, MOHAMMED NALLA, SAYING: "Those two make a fifth of the South African economy and the knock on drag that is going to imply with South African GDP means that we are likely going to be seeing a huge revision downward in terms of South Africa growth for this year." Many feel President Jacob Zuma has allowed a contest for the leadership of the ruling ANC party, due at the end of the year, to get in the way of addressing the strikes. As a result there are concerns South Africa's reputation among foreign investors is being tarnished. Finance Minister Pravin Gordhan is confident damage to the rand - which hit a three and half year low on Monday - won't be long term. And Commerzbank's Eugen Weinberg, says other forces will come to South Africa's rescue. (SOUNDBITE) (English): EUGEN WEINBERG, HEAD OF COMMODITY RESEARCH AT COMMERZBANK, SAYING "The Chinese are likely to accelerate so we will see the support for the commodity prices and we will see the support for South Africa but right now it is literally a mess." But the ANC's expelled youth league leader isn't helping. Julias Malema has been touring mines encouraging further strikes and taking jabs at Zuma. (SOUNDBITE) (English) NEDBANK CAPITAL, ECONOMIST, MOHAMMED NALLA, SAYING: "Structurally we are heading in the wrong direction, the South African economy whilst we have been sound over the last ten to fifteen years, certainly doesn't look as though it is on a strong footing right now. So I think it is bigger than the Julius Malema factor." Ratings agency Moody's has already downgraded South African bonds a notch. It looks as though there's a long way to go before Africa's biggest economy can prove the IMF wrong - it's just predicted a downgrade in growth. Joanne Nicholson, Reuters

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South Africa strikes hit rand

Wednesday, October 10, 2012 - 02:06