Lowest growth in years, thanks to mining woes

South Africa's economic growth slowed sharply in the third quarter after a contraction in the strike-hit mining sector that looks likely to reduce expansion this year for Africa's biggest economy.

Growth was at 1.2% in Q3 from 3.4% in the second quarter, dragged lower by a 12.7% decline in mining output after wildcat strikes in August in the world's biggest platinum producer.

This was the lowest quarter-on-quarter growth since the first half of 2009, when the economy was in the throes of a recession, Statistics SA said.

On an unadjusted year-on-year basis, growth was at 2.3% in the third quarter from a revised 3.1% in the previous three months. Fifteen economists polled expected GDP to have slowed to 1.5% in Q3 because of the mining strikes, which left more than 50 people dead and prompted two sovereign ratings downgrades as the country's investment image took a knock.

"If we exclude the fall in mining, the economy could have been growing at 2%," said Statistics SA's GDP expert, Kedibone Mabaso.

The weak third-quarter GDP number could pull this year's growth even lower than the 2.5% forecast by both the Treasury and the Reserve Bank as a result of eurozone economic stagnation.

This could put pressure on the Bank to reduce interest rates further next year after leaving them largely unchanged this year except for a 50 basis point cut in July.

But rising inflationary pressures leave limited room for further policy easing, with rates already at four-decade lows of 5%.