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Shrinking Economy Challenges South Africa's New Government
Contraction Underscores Acute Challenge Facing President Jacob Zuma At Start Of Second Term
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By PATRICK MCGROARTY And DEVON MAYLIE CONNECT
Updated May 27, 2014 8:44 a.m. ET
South African President Jacob Zuma takes oath during his inauguration ceremony at the Union Buildings in Pretoria, South Africa, 24 May 2014. European Pressphoto Agency
JOHANNESBURG—South Africa's economy shrank in the first quarter, leaving the country further behind its emerging-market peers and testing President Jacob Zuma's new cabinet at the outset of his second five-year term.
The 0.6% annualized drop in gross domestic product in the first three months of this year was the worst since 2009, when the South African economy slid into recession. Then a global financial storm was washing up on the country's shores. Today the economic turbulence is mostly of the country's own making.
A continuing strike by 70,000 platinum miners—the longest in the country's history—has hammered output of the key export. Consumer spending is weak as officials work to wean the poor off high-interest borrowing schemes. And factories fear more power cuts, after blackouts earlier this year caused by heavy rains that soaked government coal supplies.
The drop in output was steeper than most economists expected. The first-quarter figures sent the country's currency, the rand, down 1.5% against the U.S. dollar in the hour after it was released.
http://online.wsj.com/news/articles/...87542934728938
Contraction Underscores Acute Challenge Facing President Jacob Zuma At Start Of Second Term
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By PATRICK MCGROARTY And DEVON MAYLIE CONNECT
Updated May 27, 2014 8:44 a.m. ET
South African President Jacob Zuma takes oath during his inauguration ceremony at the Union Buildings in Pretoria, South Africa, 24 May 2014. European Pressphoto Agency
JOHANNESBURG—South Africa's economy shrank in the first quarter, leaving the country further behind its emerging-market peers and testing President Jacob Zuma's new cabinet at the outset of his second five-year term.
The 0.6% annualized drop in gross domestic product in the first three months of this year was the worst since 2009, when the South African economy slid into recession. Then a global financial storm was washing up on the country's shores. Today the economic turbulence is mostly of the country's own making.
A continuing strike by 70,000 platinum miners—the longest in the country's history—has hammered output of the key export. Consumer spending is weak as officials work to wean the poor off high-interest borrowing schemes. And factories fear more power cuts, after blackouts earlier this year caused by heavy rains that soaked government coal supplies.
The drop in output was steeper than most economists expected. The first-quarter figures sent the country's currency, the rand, down 1.5% against the U.S. dollar in the hour after it was released.
http://online.wsj.com/news/articles/...87542934728938