South Africa's Economy: At The Mercy Of Power Sector

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Friday, March 06, 2020 / 03:00 PM / United Capital Research / Header Image Credit: ESI Africa

 

Recently, the South African Statistical body - Statistics South Africa (Stats SA) - published the country's GDP report for Q4-2019. According to the report, South Africa slipped into a technical recession during the quarter (second time in two years) as the seasonally adjusted and annualized real GDP contracted for the second successive quarter (Q42019: -1.4% q/q and Q3-2019: -0.8% q/q). Also, the FY-2019 real GDP growth moderated from +0.8% y/y in FY-2018 to +0.2% y/y.

 

Notably, of the ten industries measured by Stat SA, only the Finance (+2.3% y/y), Government (+1.7% y/y) and Personal services (+1.0% y/ y) industry, grew during the year. Also, a deep look into the broad components of the economy showed that the Primary (-0.4%), Secondary (-2.9%) and Tertiary (-1.0%) components of the economy contracted during the quarter.

 

In our opinion, we believe that the contraction in Q4-2019 and slower growth in FY-2019 continue to reflect the negative impact of the country's deteriorating power situation. Specifically, the inability of Eskom (South Africa's state-owned power utility company) to meet the national electricity demand had impaired business and consumer confidence. Hence, we believe that for the economy to rebound in 2020, deliberate actions must be taken to improve the current situation of power in the country.

 

Top African Stories

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  • Tanzania's 2019 economic growth estimated at close to 6% - IMF: Tanzania's economic growth in 2019 is estimated at close to 6%, the International Monetary Fund said on Thursday, driven by "buoyant" activity in the construction and mining sectors . Read more

  • Ivory Coast's President Rules Out Running for a Third Term: Ivory Coast President Alassane Ouattara said he won't seek re-election when his second five-year term ends later this year, ending months of speculation over whether he'll extend his rule . Read more

  • African airlines face $40 mln hit in 2020 from coronavirus: Coronavirus disruption could cost African airlines $40 million in revenue this year, a global industry body said on Wednesday, a potentially devastating hit to often struggling airlines counting on lucrative Chinese routes to fund expansion . Read more

  • South Africa confirms first case of coronavirus: South Africa on Thursday confirmed its first case of coronavirus, a man who had visited Italy, and the health minister warned it would test the country's health system. Read more

 

Looking Forward

 

Angola

Feb-2020 Net Reserves - March 15th

 

 

Ghana 

Feb-2020 Gross Reserves - March 16th

 

Kenya

Jan-2020 Money Supply - March 12th

 

Mar-2020 Benchmark Interest Rate - March 19th

 

Mauritius

Mar-2020 Interest Rate - March 13th

 

Morocco

Jan-2020 Money Supply - February 28th

Mar-2020 Interest Rate Announcement - March 12th


Nigeria

Feb-2020 CPI YoY - March 16th

 

Feb-2020 Money Supply - March 17th

 

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