Skip to main content

South Africa’s eco­nomy shrank more than expec­ted.

 

South Africa flag
South Africa’s eco­nomy shrank more than expec­ted at the end of 2022 after being battered by black­outs imposed by the Eskom elec­tri­city mono­poly. Ram­a­phosa’s gov­ern­ing African National Con­gress is pre­par­ing for elec­tions next year, where its major­ity is at risk from pop­u­lar anger over the black­outs’ impact on the eco­nomy. The latest con­trac­tion means South Africa’s gross domestic product has been essentially flat since the end of 2019, even as the coun­try’s pop­u­la­tion has increased by 3.5 per cent. The eco­nomy grew just under 1 per cent in the fourth quarter com­pared with the same period in 2021, well below the expect­a­tions of most eco­nom­ists.

The South African Reserve Bank has estim­ated that rolling black­outs cost the eco­nomy about $50mn a day in shuttered factor­ies, closed shops and mal­func­tion­ing infra­struc­ture. The power crisis has also put pres­sure on the pub­lic fin­ances after the South African National Treas­ury announced last month it would back­stop $14bn of Eskom’s debts in the com­ing years to pre­vent its fin­an­cial col­lapse. South Africa’s weak growth «is unlikely to improve any time soon as severe power cuts and fiscal con­sol­id­a­tion con­tinue to weigh on the eco­nomy», said Virág Fór­izs, emer­ging mar­kets eco­nom­ist at Cap­ital Eco­nom­ics.

www.sba.tax

Labels:

Comments

Post a Comment

Cloud Bookkeeping

US FED rate rise.

  The US Federal Reserve officials have indicated that they plan to resume increasing interest rates to control inflation in the world's biggest economy. During the June meeting, the Federal Open Market Committee reached a consensus to keep interest rates stable for the time being to evaluate whether further tightening of policy would be necessary. However, the majority of the committee anticipates that additional rate increases will be required in the future. The minutes of the meeting have recently been made public. According to the minutes, most participants believed maintaining the federal funds rate at 5 to 5.25 per cent was appropriate or acceptable, despite some individuals wanting to raise the acceleration due to slow progress in cooling inflation. Although Fed forecasts predicted a mild recession starting later in the year, policymakers faced challenges in interpreting data that showed a tight job market and only slight improvements in inflation. Additionally, officials gr...
Post a Comment
Read more

EU business slide.

  S&P Global’s flash eurozone composite purchasing managers’ index, a key gauge of business conditions for the manufacturing and services sector, fell 1 point to 47.1, figures showed yesterday. That is its lowest level since November 2020 and the fourth consecutive month below the crucial 50 mark separating growth from contraction. One of the few bright spots in the survey was that companies in all sectors reported a slight easing of cost pressures, price growth and supply chain constraints. However, prices charged for goods and services still rose at the sixth fastest rate since such data started in 2002. Jobs growth increased marginally from October but remained low compared with the past 18 months. Following a few months of falling price pressure in manufacturing and services, the October print shows an overall stabilisation said Jens Eisenschmidt, chief European economist at Morgan Stanley. However, German businesses, at the hub of Europe’s energy crisis, reported that manu...
1 comment
Read more

EU debt reduction

  Brussels wants to give EU capitals extra time to curb their debts and create space for public investment as part of an overhaul of the EU’s deficit rules .  The European Commission would table a proposal at the end of the month to reform the Stability and Growth Pact ,  under which it would work out multi-year ,  country-specific plans with capitals for getting their debt burdens under control ,  EU officials said .  The proposals come as member states face mounting fiscal burdens as they spend hundreds of billions of euros sheltering businesses and households from the energy crisis .  Under the new blueprint ,  the commission would propose a four- or five-year plan to an EU member state to get its public debt burden on a credible ,  downward trajectory ,  officials said . The national fiscal plan would need to pass a debt sustainability analysis and be approved by the commission and EU council .  The new regime would ditch an EU ...
Post a Comment
Read more