IMF may cut South Africa's 2014 growth forecast to 2% or less after nation's long mining strike caused economy to contract unexpectedly by annualized 0.6% in Q1

Cindy Allen

June 9, 2014 (Bloomberg LP) – The International Monetary Fund may cut South Africa’s growth forecast for this year to about 2 percent or less after the nation’s longest mining strike caused the economy to contract.

“Following the release of the first-quarter gross domestic product numbers we are likely to revise our forecast,” Nasha Mavee, a representative of the IMF in South Africa, said at a conference today in Johannesburg. In April, the IMF had projected expansion of 2.3 percent.

South Africa may be heading for its first recession in five years after GDP shrank an annualized 0.6 percent in the first quarter compared with the previous three months. Mining plunged 25 percent in the period as a strike by about 70,000 workers that began on Jan. 23 shut the world’s biggest platinum mines.

Finance Minister Nhlanhla Nene told the London-based Financial Times that the government’s forecast of 2.7 percent economic growth this year looks beyond reach. The economy will probably avoid recession, with the growth rate reaching “around 2 percent,” he said in an interview with the newspaper published today.

To contact the reporter on this story: Rene Vollgraaff in Johannesburg at rvollgraaff@bloomberg.net To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net Sarah McGregor

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