Johannesburg, March 8 — South Africa’s economy contracted by 1.3% in the fourth quarter of 2022, a much steeper decline than the anticipated 0.4%. Analysts attribute the downturn to rolling blackouts that disrupted businesses and hiked production costs. Only two days during the quarter were blackout-free, which impacted productivity and took a significant toll on several industries. The agriculture and mining sectors were hit the hardest, contracting by over 3%.
While the South African economy expanded by 2% throughout the year, it still falls far below the 5 to 6% target that economists believe is required to make a meaningful impact on the country’s 33% unemployment rate. These numbers have dealt a significant blow to President Cyril Ramaphosa’s administration, which has been working hard to reinvigorate the country’s economy since taking office in 2018.
Rolling blackouts, or “load shedding,” have been a persistent issue in South Africa, impacting individuals and businesses alike. The country’s power utility, Eskom, has struggled with operational and financial challenges, making it difficult to keep up with the country’s growing demand for energy. This issue has led to multiple credit downgrades and hampered the country’s ability to attract foreign investment.
The government is now being pressured to implement new measures to prevent future blackouts, as well as provide support to businesses impacted by the outages. Despite these challenges, there are still glimmers of hope for the South African economy. The government has implemented numerous reforms to improve the country’s business environment and attract foreign investment, and some sectors, such as tourism, have shown signs of recovery.
However, until the power issues are resolved, the economy will likely continue to struggle, impacting both businesses and individuals across the country. – BBC News
