Mining slump hits South African GDP

JOHANNESBURG - South Africa's economy shrank by an annualised rate of 0.6% in the first three months of the year, the worst quarterly performance in five years, official data has shown.

The contraction, which was bigger than analysts expected, was largely due to a slump in mining activity, the figures from Statistics South Africa showed.

Gold mining saw production fall, as well as platinum and diamond mining.

Workers in platinum mines have been on strike for five months.
"This makes for grim reading," said Razia Khan at Standard Chartered Bank.

"Mining, hit by protracted industrial unrest, fell almost 25% on an annualised basis. Manufacturing was down 4.4%."

This is the first quarter of negative growth since the second quarter of 2009. In the final quarter of 2013, the economy grew by an annualised rate of 3.8%.

The rand fell by about 1% against the dollar following the release of the figures, to 10.44 rand.

Compared with a year earlier, the South African economy grew by 1.6%. GDP growth has been slowing steadily for the past three years as the economy struggles with high levels of unemployment, which currently stand at almost 25%.

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