South Africa’s current bout of intense rolling blackouts threatens to further weigh on economic activity, weaken business confidence and weigh on investment, according to Absa.
While state-owned power utility Eskom has implemented outages in Africa’s most-industrialised economy for almost two decades, it has for the past seven days subjected the country to record blackouts — as much as 12 hours a day — to protect the power grid from collapse as its ageing, mostly coal-fired power plants fail. Short-term solutions to alleviate the crisis have yet to be announced.
“I don’t know and I don’t think Eskom knows how quickly they’re going to be able to sustainably scale back load shedding from Stage 6,” said Peter Worthington, a senior economist at Absa, referring to the outages in which 6,000 megawatts of power is removed from the grid. Blackouts over the holiday period from mid-December to early January, when electricity demand eases, shows the strain on the grid, he said. How much of the outages are due to, a cluster of simultaneous bad-luck events, or “deeply entrenched system problems” at the company — where maintenance over the past decade has been patchy — is unknown, Worthington said.
Each quarterly decline of 1% in electricity consumption is associated with a 0.16% decrease in gross domestic product growth, according to Absa’s research. The economy is unlikely to expand by more than 0.3% quarter-on-quarter through 2023, according to a Bloomberg survey of economists that also sees a 45% chance of the economy slipping intoPower cuts likely shaved 1.3 percentage points off economic growth in 2022, when South Africa endured a record 205 days of rationing, Worthington said.
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