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Fears grow over S. Africa's weakening currency

Wednesday, June 05, 2013 - 02:26

June 5 - South Africa's weakening currency is causing concern among investors. As Joel Flynn reports, the economy in this once thriving emerging market is slowing, and many blame the President.

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TV AND WEB RESTRICTIONS**NONE**~ South Africa's currency has recovered a little this week, but it's still not in good shape -- in fact only Venezuela and Syria are worse off. The rand lost 10% of its value against the dollar in May and around 15 percent this year. It hasn't been that bad since 2009 when Africa's biggest economy was in recession. It's making life very difficult for shop owners like Akhbar Mohammed. SOUNDBITE: Johannesburg Store Owner, Akhbar Mohammed, saying (English): "Things are getting bad - we can see from our daily sales it has dropped a lot, at least about 30 percent since the rand went heyday. We hope that the government looks at it and tries to improve the position of the rand, otherwise we are all in trouble and we'll have to lay-off staff." The wider economy is also suffering. According to Statistics South Africa growth has fallen to 2009 levels. Wildcat strikes affecting its key mining industry haven't helped. And economist David Shapiro says economic growth forecasts of 3 percent aren't good enough. SOUNDBITE: Sasfin Economist, David Shapiro, saying (English): "We are a kind of economy that can't grow at those numbers - we need much higher growth. Some of our problems are on the export side, on the mining side we have labour issues there. So put all these together and foreigners are starting to stand back and re-look at the South African economy." President Jacob Zuma is taking much of the blame. Since coming to power four years ago he's been hit by a series of scandals - one involving his relation with the Guptas - a powerful business family originally from India. His apparent reluctance to tackle the mining unions is also a problem for some. SOUNDBITE: Sasfin Economist, David Shapiro, saying (English): "He dismissed the strikes as being a democratic right. Well it's a democratic right if it is done properly, but if it is done in such way that it destroys the corner stone of our economy - and he said mining was the corner stone of our economy - then it does have negative implications." Union battles are far from settled - an Anglo American Platinum plan to cut 6,000 jobs is being opposed. And wages talks across the sector are looming - one mining union wants increases of up to 60 percent. That's at a time when commodity prices are falling. With an election due early next year the ruling ANC party could be damaged, although it's still likely to win.

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Fears grow over S. Africa's weakening currency

Wednesday, June 05, 2013 - 02:26