Labour disputes, energy shortages and other supply-side disruptions had weighed down consumer confidence and lowered the demand for goods and services, contributing to South Africa’s projected gross domestic product (GDP) growth of only 2.1% for 2013, Finance Minister Pravin Gordhan said in his Medium-Term Budget Policy Statement on Wednesday.

He said that while all sectors of the economy had shown a slowdown in economic activity, production stoppages were most pronounced in the mining and manufacturing sectors.

“This has created considerable volatility in the country’s GDP, as declines in one quarter are followed by growth in the next – a pattern that prevents the economy from sustaining higher growth momentum,” the Minister noted.

Platinum production was under pressure, owing to escalating costs and labour unrest, while the performance of the gold sector also reflected the impact of strikes and lower prices, as well as longer-term trends, such as declining ore grades and the need for deeper shafts.

Real value-add in the gold sector decreased by an annualised 5.6% in the second quarter of the year, after increasing by 14.6% during the first quarter.

Further, the manufacturing sector contracted by an annualised 7.9% in the first quarter of 2013 following large-scale maintenance stoppages, but rebounded to an annualised 11.5% growth in the second quarter.

Gordhan also stated that government was working with business, labour and State-owned companies to tackle short-term sectoral challenges, as well as longer-term constraints.

Speaking during a media briefing ahead of his address to Parliament, Gordhan commended the work done by Trade and Industry Minister Dr Rob Davies and Deputy President Kgalema Motlanthe to stabilise the automotive and mining sectors respectively.

He added that the levels of cooperation between business, labour and government had to be increased even further.

The main initiatives embarked on to deal with the short-term constraints in the country’s key economic sectors included an agreement aimed at securing the rapid and peaceful resolution of labour disputes in the mining sector, building consensus on the future development of the mining sector, and addressing gaps in the social wage and workings that contributed to lengthy labour disputes.

ENERGY PLANS
Meanwhile, with regard to energy shortages, Gordhan said that the Medupi power plant, which was expected to come on line in 2014, would provide the country with additional energy supply, while clear policy frameworks for new oil and gas exploration opportunities would also improve South Africa’s ability to meet its future energy requirements.

Other government initiatives aimed at relieving the energy supply constraints included the progressive implementation of the Renewable Energy Independent Power Producer Procurement Programme, which was in its third round of contract awards, as well as the publication of blending regulations for biofuels, with pricing arrangements expected to be finalised by mid-2014.

Further, requests for proposals to procure the next coal-fired power station and for the cogeneration of electricity were also expected to be issued by mid-2014.