Finance Minister concerned about looming recession

Finance Minister Enoch Godongwana said he is concerned that South Africa’s intensity of load-shedding could plunge the country into a recession.

Godongwana told CNBC Africa at the African Development Bank Annual Meetings in Sharma El Sheikh, Egpyt, that it’s difficult to know whether South Africa will experience a recession this year.

He said the country’s intensity of load-shedding will determine whether South Africa will hit a recession.

South Africa has experienced more than 130 days of load-shedding in 2023, as Eskom’s power stations continue to face breakdowns and supply shortages.

“At the moment, everyone does not look at us in a favourable light, and it boils down to the intensity of load-shedding,” said Godongwana.

“Even when speaking about the forecast of the economy, that debate rotates around the intensity of load-shedding.”

However, unlike many African peers, South Africa’s electricity woes do not stem from a financing problem. Rather, the country has a “critical problem” with its state-owned power company, Eskom.

This makes it difficult to predict the intensity of load-shedding going forward and, therefore, its impact on the economy. 

The South African Reserve Bank (SARB) governor Lesetja Kganyago said that load-shedding alone will deduct an estimated two percentage points from the country’s economic growth this year.

“Energy and logistical constraints remain binding on South Africa’s growth outlook, limiting economic activity and increasing costs,” said Kganyago at the latest Monetary Policy Committee (MPC) meeting.

SARB governor Lesetja Kganyago

Revenue and the rand

Godongwana said another factor that worries him regarding South Africa’s economic growth is the revenue the National Treasury saw in the first month of the year, which “did not look good”.

He said this low revenue reflects the economy’s performance.

Godongwana also expressed concern over the weak rand, which causes problems for his department.

He said if the rand does not strengthen, it will greatly impact the country’s finances and negatively affect his budget.

However, he said the government could not do much about the currency’s weakness.

“There are very limited things the government can do. Many things are beyond the government’s control, like a sell-off of emerging market assets,” he said.


Many experts have said South Africa may already be in a recession and, if not, will see one soon.

Bloomberg reported in April that South Africa’s economy has likely already entered a technical recession

The BankservAfrica Economic Transactions Index, an early indicator of economic activity, dropped 1.7% in the first quarter compared with the prior three months.

A median estimate in a Bloomberg survey of analysts is for a quarterly GDP expansion of 0.2%. 

Several entities have lowered their expectations for South Africa’s GDP growth in 2023 due to ongoing load-shedding.

Rating agency Fitch reduced its 2023 GDP growth forecast for South Africa to just 0.2% in March, largely due to the effects of ongoing load-shedding.

The International Monetary Fund predicts only 0.1% GDP growth for the country in 2023 due to “a significant increase in the intensity of power cuts, as well as the weaker commodity prices and external environment”.

The SARB lowered its expectations for the country’s growth at its March MPC meeting, predicting a mere 0.2%. However, at its most recent meeting, the SARB’s expectations were revised slightly upwards to 0.3%.