{"id":828191,"date":"2025-06-13T12:31:02","date_gmt":"2025-06-13T10:31:02","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=828191"},"modified":"2025-06-13T12:31:51","modified_gmt":"2025-06-13T10:31:51","slug":"double-blow-for-south-africa-3","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/828191\/double-blow-for-south-africa-3\/","title":{"rendered":"Double-blow for South Africa"},"content":{"rendered":"\n

On top of another month of decline in the manufacturing sector, South Africa’s mining sector has also delivered its sixth consecutive month of recession, painting a bleak picture for the country’s economy.<\/p>\n\n\n\n

Mining data published by Stats SA this week showed a significant decline in production, down 7.8% year-on-year in April.<\/p>\n\n\n\n

According to economists, this was a shocking result, coming in far lower than the consensus expectations of around a 4% decline.<\/p>\n\n\n\n

The biggest drag came from a 24% drop in the production of Platinum Group Metals (PGMs), which contributed to an 8.0 percentage point decline in the sector.<\/p>\n\n\n\n

This was followed by gold (-2.5%) and coal (-1.7%) which both shaved off 0.3 percentage points from the annual figure. <\/p>\n\n\n\n

In contrast, iron ore made the largest positive contribution to output, up 5.3%, adding 0.7 percentage points.<\/p>\n\n\n\n

The contraction of 7.8% in April was down from an upwardly revised 2.5% year-on-year contraction in the prior month. <\/p>\n\n\n\n

According to Investec economist Lara Hodes, the decline in mining was underpinned by elevated uncertainty around the extent and effect of tariffs on global trade and growth.<\/p>\n\n\n\n

This remains a key downside risk, she said, and was especially egregious in April, where new export orders suffered their steepest decrease since August 2023.<\/p>\n\n\n\n

The decline was notable because it came despite a surge in the gold price as a safe-haven investment around the same time.<\/p>\n\n\n\n

This is because domestic faces a myriad of challenges, Hodes said.<\/p>\n\n\n\n

“Specifically, the domestic mining sector as a whole has to contend with heightened input costs, labour challenges, the effects of illegal mining and notably logistics bottlenecks, weighing on activity and export potential,” she said.<\/p>\n\n\n\n

Gold mining in particular has been in steep decline<\/strong><\/a>. <\/p>\n\n\n\n

Once the cornerstone of South Africa\u2019s economy, gold production has steadily declined over the past few decades, leading to the loss of more than 440,000 jobs since the late 1980s.<\/p>\n\n\n\n

Gold production has dropped dramatically\u2014from 620 tonnes in 1988 to just 97 tonnes in 2023.<\/p>\n\n\n\n

While gold still lies deep underground, the economics of extraction, compounded by steep electricity and water costs, have made much of it unreachable.<\/p>\n\n\n\n

Manufacturing another black spot<\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

The mining data follows the release of manufacturing data, which, earlier this week, showed a notable 6.3% year-on-year decline for April.<\/p>\n\n\n\n

Like mining, this was far worse than economists’ expectations of a 4.5% decline and followed a revised 1.2% decrease for March.<\/p>\n\n\n\n

The mining and manufacturing sectors are key indicators for South Africa’s overall economic performance.<\/p>\n\n\n\n

With April being the first month of the second quarter data, this spells really bad news for economic growth in the quarter.<\/p>\n\n\n\n

GDP for the first quarter of the year scraped by with a 0.1% increase, largely thanks to the country\u2019s agriculture sector, which outperformed.<\/p>\n\n\n\n

However, Q2 is heading for a likely decline, with projections for the rest of the year also bearish.<\/p>\n\n\n\n

Global and local analysts have already slashed South Africa’s overall growth rate projections for 2025, moving from hopeful forecasts of 2% to between 1% and 1.5%, leaning heavily toward 1%.<\/p>\n\n\n\n

More bearish economists have predicted a sub-1% outcome for the year, which, after a revised 0.5% result for 2024, means the country is unlikely to escape its trap of perpetual stagnation.<\/p>\n\n\n\n

South Africa needs economic growth to exceed 3% if it has any hopes of turning its prospects around and delivering the jobs needed to address its insanely high unemployment rate.<\/p>\n\n\n\n

While the Government of National Unity (GNU) has purportedly put this at the top of its agenda, it has been slow to introduce the needed reforms to accomplish this. <\/p>\n\n\n\n

According to Hodes, there has been some progress in a number of areas, largely thanks to Operation Vulindlela.<\/p>\n\n\n\n

Phase II of the programme, which aims to accelerate economic reforms, was launched last month. <\/p>\n\n\n\n

However, the Bureau for Economic Research has previously noted that many Phase I projects are still incomplete, leaving the second phase to play catch-up.<\/p>\n","protected":false},"excerpt":{"rendered":"

Two of South Africa’s critical economic sectors have declined worse than expected, painting a really bleak picture for GDP growth this year.<\/p>\n","protected":false},"author":10,"featured_media":814856,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[14829,1498,3387,2319],"class_list":["post-828191","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-ber","tag-investec","tag-manufacturing","tag-mining"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/828191","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=828191"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/828191\/revisions"}],"predecessor-version":[{"id":828193,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/828191\/revisions\/828193"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/814856"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=828191"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=828191"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=828191"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}