…and it seemed to have been a horror week for the local economy. It started off relatively well, with the feel good factor that Moody’s didn’t downgrade the country’s sovereign credit rating following their most recent review that was released at the end of last week
They kept a negative outlook on the rating, but saw the glass as half full by noting that the economy reached a turning point and that they were satisfied with governments’ efforts to reduce debt levels and the fiscal deficit. Actual economic data, however, painted a bleak picture. The official unemployment rate spiked to 26.7% – the highest level on record since the survey started in 2008.
Mining activity plunged by 3.4% in March and was 18% lower than a year ago. The mining sector now accounts for less than 8% of GDP activity, but the sector is still a large contributor to exports and the weakness is disappointing. Mining activity will detract from GDP growth during the first quarter. Manufacturing production for March also came in weaker than expected as it hardly grew during the first three months of the year and was down 2.2% year on year. The attention will now shift the Reserve Bank when they meet to decide on interest rates next week.