Platinum strike has knocked economy to its knees

Ntsakisi Maswanganyi and Karl Gernetzky write that SA’s costliest and longest strike brought the economy to its knees in the first quarter.  Some economists are warning of a recession as there is still no end in sight to the 18-week wage strike on the platinum belt.  It has now spilt over into the second quarter, with mines in Rustenburg crippled in April and May.  That spans the first two months of the second quarter, strongly suggesting that economic data for the period will disappoint.  These factors, coupled with constraints such as disruptions to the electricity supply and a slow roll-out in infrastructure spending, are weighing on growth.  A recession is defined as two consecutive quarters of contracting economic growth.  SA’s last recession, caused by the aftershocks of the global financial crisis, was in 2009.  A 24.7% contraction in mining and quarrying — the biggest contraction in almost 50 years — saw economic growth falter in the first quarter.  Manufacturing also fell.  Renaissance Capital economist Thabi Leoka said a recession was possible given that the strike had not yet been resolved.  But, Econometrix chief economist Azar Jammine said a recession was only possible if the strike at platinum mines continued for "the rest of the year".

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