Editorials 11.7.2014 07:00 pm

Strikes shrink SA’s prospects

We doubt whether the likes of Numsa’s Irvin Jim or Amcu’s Joseph Mathunjwa care, but the International Monetary Fund looks set to downgrade its outlook for South Africa.

This comes after ratings agency Standard & Poor’s (S&P) last month lowered SA’s rating to one level above junk status, and Fitch dropped SA to negative. A common theme in this pessimism is strike action, for which we must thank the likes of Jim and Mathunjwa.

Axel Schimmelpfennig, IMF senior representative in SA, told Business Day: “Later this month the IMF will release its July world economic outlook update and I would expect that we will revise down South Africa’s growth outlook for 2014, in line with other observers”.

With this in mind, the Reserve Bank’s lowered projection of 2.1 percent growth looks over-optimistic. S&P are predicting 1.9 percent, while Fitch are pitching 1.7 percent for SA.

Admittedly other factors are taken into account, including power outages and the international economic climate. Yet the Numsa strike, in support of an unrealistic 15 percent wage hike demand, will harm SA’s outlook. Lower growth means higher unemployment. Any increases will be meaningless to those who lose their jobs.

 

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