Zimpapers Logo

South Africa’s economy shrank more than expected in the fourth quarter, when the state-owned power utility intensified rolling blackouts that continue to put a dampener on output.

Gross domestic product contracted 1,3 percent in the three months through December, compared with upwardly revised growth of 1,8 percent in the previous quarter, Statistics South Africa said Tuesday in a report released in the capital, Pretoria. That’s the biggest contraction since the third quarter of 2021, when deadly riots, looting and arson disrupted supply chains, industrial output and demand for manufactured goods.

The median of 12 economists’ estimates in a Bloomberg survey was for a 0,4 percent slump.

Eskom subjected the country to power cuts, known locally as load shedding, on all but three days in the fourth quarter. The company, which produces almost all of South Africa’s electricity, has struggled to meet demand since 2008, and has imposed severe outages every day this year to protect the grid from collapse.

Sustained blackouts are seen as the most significant risk to economic growth.

Economists in a separate Bloomberg survey predict a contraction in gross domestic product in the three months through March, meaning the economy may already be in recession.

The electricity crisis is costing the country as much as R899 million per day and will shave 2 percentage points off output growth in 2023, according to South African Reserve Bank estimates. 

It sees the economy expanding by 0,3 percent this year, well below the National Treasury’s growth estimate of 0,9 percent.– Bloomberg