Near-term risks to South African growth likely tilted to downside

Near-term risks to South Africa's growth remain tilted to the downside, amid an increasingly embattled mining sector and a constrained consumer. In the mining sector, about 12% of PGM production is at risk over the next 24 months, as major producers face significant liquidity and operational challenges. 

"Similar dynamics may play out over the next 24 months in South Africa's gold industry unless radical changes are made. For gold, we think 22% of current output is at risk. This is, of course, on top of the very real possibility that the gold mining sector could face strike action if mediation fails to produce a wage deal in the next three weeks", says Barclays. 

Taken together, these potential losses would represent serious macroeconomic fallout. The loss in production could knock half a percentage point or more off GDP and cut some R18bn from exports (about 0.6% of GDP). 

Assuming, say, the loss of 100k jobs total in the two sectors, with their average monthly income of roughly 16k (in 2014), this would mean more than R19bn in lost wage earnings, ie, some 0.8% of total household consumption, before any multiplier effects.