Tuesday, June 10, 2014 5:51 pm
Johannesburg – South Africa’s economy faces “enormous headwinds” caused largely by self-inflicted domestic problems including a crippling strike in the platinum sector, Reserve Bank Governor Gill Marcus, said on Tuesday.
The country’s economy contracted in the first quarter of the year.
Output from the key manufacturing and mining sectors shrank, the later was hit by a five month long strike in the platinum sector.
The first quarter contraction had raised fears of a recession, the first since 2009, which was largely triggered by the global financial crisis.
However, the latest economic dip stems mostly from domestic problems, Marcus says.
“The slowdown we have experienced is domestically driven, largely self-inflicted and we cannot blame external factors alone,” she said.
Marcus also told a business meeting in Johannesburg that the era of abundant portfolio flows to emerging markets appeared to be over and the outlook for the region was fragile.
Recovery reports from the U.S. is “good news” for the global economy, but this had implications for emerging markets that have benefited from massive asset purchases by the Federal Reserve.