South Africa’s economy shows surprising resilience amidst load-shedding

Load-shedding is causing severe damage to the South African economy, but economists said the impact is less than expected.

Council for Scientific and Industrial Research (CSIR) senior researcher Monique le Roux recently said they estimate load-shedding cost the economy R560 billion in 2022.

Le Roux said load-shedding costs the South African economy around R87 per KW of electricity which is not supplied.

Using the number of hours of unserved energy translates into R560 billion lost to the economy in 2022 because of rolling blackouts.

Although it is difficult to accurately calculate the impact of load-shedding on economic activity, the economist said South Africa proved surprisingly resilient.

Peter Attard Montalto, head of capital markets research at Intellidex, said the local economy was more robust than expected.

“The impact of load-shedding in the South African economy is much less than what it would have been a year ago,” he said.

“The reason is that businesses, factories, and households adapted with around 1.2GW of unregistered rooftop solar installations over the last year.”

There is also a huge number of backup diesel generators and batteries to keep businesses going during power outages.

“The South African economy is remarkably resilient, despite not really going anywhere,” Attard Montalto said.

The latest economic transactions data for South Africa back up his comments.

The BankservAfrica Economic Transactions Index (BETI) for December 2022 improved despite the ongoing, dismal economic context.

On an annual basis, the BETI increased by 1.7% vs a revised decline of 0.9% in November.

The monthly, quarterly, and annual improvements all signal some improvement in the broader economy.

While the improvement in the BETI for December is encouraging, there are indications that South Africa could expect ‘more of the same’ in 2023.

Headwinds, which include load-shedding and households under pressure from elevated inflation and interest rates, are likely to remain.


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