Page 13 - AfrElec Week 03 2023

AfrElec POLICY AfrElec

SA faces 45% chance of

recession in 2023

SOUTH AFRICA SOUTH Africa is facing a 45% chance of slipping “isn’t impressive,” Finance Minister Enoch
into recession this year as the country’s electricity Godongwana said last week, citing electricity
crisis worsens, according to the latest Bloomberg supply constraints.
monthly survey of economists conducted from Current sustained “extreme levels” of load
January 9-12. shedding are the most significant downside
Seven economists responding to a ques- risk to the country’s economic growth pros-
tion about the chance of a recession in Africa’s pects, economists at the Bureau for Economic
most-industrialised economy said the possi- Research (BER) of Stellenbosch University said
bility of it happening in the coming 12 months in a note published on BER’s website on Monday.
increased from odds of 35% in November, The economy is unlikely to grow by more
around the start of the longest streak of consecu- than 0.3% quarter-on-quarter through 2023,
tive daily power outages. according to Bloomberg’s survey. Economists
The prediction comes as South Africa’s ongo- see gross domestic product (GDP) growth slow-
ing energy crisis risks intensifying and dim ing to 1.2% this year from 2.3% in 2022.
global economic prospects threaten to further While inflation is expected to ease, it’ll only
curb domestic output, Bloomberg writes. be back near 4.5%, which is the midpoint of the
Power cuts, known locally as load shedding, central bank’s target range where the monetary
have escalated since last week when struggling policy committee prefers to anchor price-growth
national power utility Eskom implemented its expectations, in the fourth quarter, before accel-
worst-ever power cuts until further notice. erating again into 2024, the survey says.
Eskom, which supplies more than 90% of According to economists, the South African
South Africa’s electricity, is currently imposing Reserve Bank (SARB) will probably extend its
rolling power outages for between eight to 12 most aggressive monetary policy tightening in
hours a day for households and businesses across at least two decades, with the key interest rate
the country, bneIntellinews reports. rising to 7.5% by the end of the first quarter from
The heavily indebted state-owned enterprise 7% now.
(SOE) implemented load shedding on more than A gradual easing of borrowing costs will start
200 days in 2022, the most in a calendar year, as in the fourth quarter, writes Bloomberg. The
its old coal-fired plants continued to break down. central bank will give its next decision on the
The outlook for South Africa’s economy in 2023 benchmark rate on January 26.™

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