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SOUTH AFRICA: Pressure on Growth Eases as Load-Shedding Declines, Fitch Says

SOUTH AFRICA
EM BulletBulletGlobalEmerging Market NewsRegion

Recent reductions in the frequency and severity of power cuts should ease downward pressures on South Africa’s supply-side potential growth, Fitch Ratings says in a new report.

  • Estimates suggest load-shedding has reduced GDP growth by the equivalent of 0.6pp a year over the past five years. However, power cuts could ease significantly as load-shedding has been far less frequent this year.
  • More reliable power will not transform South Africa’s supply-side performance over the medium term, although it should result in a significant reduction in supply-side constraints in the next couple of years.
  • Fitch projects South Africa’s potential growth rate at 1% over the next five years, which is an improvement on the past few years, although still very low by emerging-market standards.

Full note here.

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Recent reductions in the frequency and severity of power cuts should ease downward pressures on South Africa’s supply-side potential growth, Fitch Ratings says in a new report.

  • Estimates suggest load-shedding has reduced GDP growth by the equivalent of 0.6pp a year over the past five years. However, power cuts could ease significantly as load-shedding has been far less frequent this year.
  • More reliable power will not transform South Africa’s supply-side performance over the medium term, although it should result in a significant reduction in supply-side constraints in the next couple of years.
  • Fitch projects South Africa’s potential growth rate at 1% over the next five years, which is an improvement on the past few years, although still very low by emerging-market standards.

Full note here.