South Africa’s economy shrank more than expected.

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.

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