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South Africa’s central bank has warned that the economy can stagnate if it continues to face the present electricity crisis. The apex bank has said that its growth prospects for the year have been set at 0.3 percent as against 2% in 2022.
South Africa’s central bank has warned that the economy can stagnate if it continues to face the present electricity crisis. The apex bank has said that its growth prospects for the year have been set at 0.3 percent as against 2% in 2022.
The IMF prediction of growth is also not far off the mark. The short-term outlook because of the power crisis is dithering, the IMF said, adding that the real GDP growth is expected to slow sharply to 0.1% in 2023, mainly due to a significant increase in the intensity of power cuts. The last quarter of 2022 has witnessed a contraction of GDP to the extent of 1.3 percent. At that pace of growth, the Fund predicted that the country would enter a recession, if the contraction is spilled over to the first quarter of 2023.
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All studies about the ailing South African economy converge to the point that the low growth prospects are mainly triggered by the electricity crisis. The scheduled load shedding continues unabated with the state-owned Eskom unable to generate enough power for South Africa’s 60 million people. An estimate puts that the country is losing close to US$50 million a day due to production loss for want of uninterrupted energy. Old and poorly maintained plants are the major reason for the present crisis. On top of it, the country’s drive to switch over to alternative sources of energy may take time to fructify.
