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<\/p>\nAfrica\u2019s most industrialized economy faces a 45% chance of slipping into recession this year as South Africa\u2019s electricity crisis deepens.<\/p>\n
The probability of it happening in the coming 12 months increased from odds of 35% in November, around the start of the longest streak of consecutive daily power cuts. That\u2019s according to the latest Bloomberg monthly survey of economists, conducted between 9 and 12 January 2023, with seven economists responding to a question about the chance of a recession.<\/p>\n
The prediction comes as the country\u2019s ongoing energy crisis risks intensifying and dim global economic prospects threaten to further curb domestic output. The outlook for South Africa\u2019s economy in 2023 \u201cisn\u2019t impressive,\u201d Finance Minister Enoch Godongwana said last week, citing electricity-supply constraints.<\/p>\n
Eskom, the state-owned company that produces almost all of South Africa\u2019s electricity, has for the past seven days subjected the country to record blackouts \u2014 as much as 12 hours a day \u2014 to protect the power grid from collapse as its ageing, mostly coal-fired power stations fail.<\/p>\n
It has already used up money for diesel supplies allocated to fuel auxiliary plants for the year through March, and a unit at its nuclear station is shut down for a revamp, meaning any additional faults among its assets and infrastructure could move South Africa to its highest level of outages yet.<\/p>\n
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Sustained outages, known locally as load shedding, at the current \u201cextreme levels\u201d are the most significant downside risk to the country\u2019s economic growth prospects, the Bureau for Economic Research\u2019s Tracey-Lee Solomon, Romano Harold and Hugo Pienaar said in note published on its website on Monday.<\/p>\n
The economy is unlikely to grow by more than 0.3% quarter-on-quarter through 2023, according to Bloomberg\u2019s survey. Economists see gross domestic product growth slowing to 1.2% this year from 2.3% in 2022.<\/p>\n
While inflation is expected to ease, it\u2019ll only be back near 4.5% \u2014 the midpoint of the central bank\u2019s target range at which the monetary policy committee prefers to anchor price-growth expectations \u2014 in the fourth quarter, before accelerating again into 2024.<\/p>\n
The South African Reserve Bank will probably extend its most aggressive monetary policy tightening in at least two decades, with the key interest rate rising to 7.5% by the end of the first quarter from 7% now. A gradual easing of borrowing costs will start in the fourth quarter, according to economists.<\/p>\n
The central bank will give its next decision on the benchmark rate on 26 January.<\/p>\n