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The SA Daily 11 April 2019

Mining too undermined

Shireen Darmalingam

  • February mining production is due out today. Bloomberg consensus sees production remaining in contraction, at -2.5% y/y, from -3.3% y/y in January. But, m/m growth should be positive, at 0.1% m/m in February, from 0.2% m/m in January.
  • Mining production growth had declined further in the three months to January, by 4.7% q/q (sa), from a 0.2% q/q (sa) in the three months to December 2018. This foretells of weaker growth for H1:19 amid SA policy and political uncertainty and also ahead of the national elections in May.
  • Mining sector growth looks bleak medium term amid the slowing global economy and with China in retreat too. SA real economic activity is hardly being supported by ongoing power cuts and above-inflation electricity price hikes, all of which undermines mining production growth.
  • We forecast GDP growth at 1.1% in 2019 and 1.8% in 2020.
  • The IMF has now trimmed its outlook for SA; GDP was revised to 1.2% (from 1.4%) for 2019 and 1.5% (from 1.7%) for 2020, with the IMF citing political and policy uncertainty as key risks. The IMF sees GDP growth at around 1.75% beyond 2020 due to SA’s persistent structural bottlenecks.

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