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South Africa’s economic activity as measured by GDP growth fell by 1.3% in the last quarter of 2022. The drop is below its pre-pandemic level. The reason attributed to the drop is the record power cuts the country has suffered in the recent times
South Africa’s economic activity as measured by GDP growth fell by 1.3% in the last quarter of 2022. The drop is below its pre-pandemic level. The reason attributed to the drop is the record power cuts the country has suffered in recent times. The GDP recovered marginally in the third quarter of 2022. However, it fell by 1.3% in the fourth quarter from the previous quarter, which is below the pre-pandemic level. There was no forecast for a drop in the GDP in the fourth quarter. Foreign trade and the financial sector dragged down the growth vectors, with exports dropping by 4.8%. The slide in agriculture, mining, and manufacturing was also noticeable. In the third quarter, GDP expanded by 1.6% in seasonally adjusted terms.
The power crisis has been a predominant factor in pulling down the growth tempo. There were 207 days of outages in 2022 compared to 75 in 2021, mostly due to the malfunctioning of Eskom, which supplies 90% of South Africa’s electricity.
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Most of its (ESKOM’s) power stations are over forty-five years old and frequently break down. This causes power cuts of up to twelve hours a day, entailing a daily loss of more than US$50 million. The downward growth of the economy was visible for the last two years on account of the Covid-19 pandemic and the continued impact of the power crisis. The country’s economic growth has been decelerating for about two years. It fell from 2.5% in 2022 to just 0.3% in 2023. The country has announced a state of national disaster on account of the power crisis. The state also has appointed a minister in charge of electricity, besides appointing Kgosientsho Ramokgopa, a 48-year-old civil engineer and former mayor of Pretoria as the new CEO of Eskom.
