The severe bout of load shedding in the first half of December likely catapulted the economy into a recession, Nedbank economists said in a research note on Wednesday (5 February).

“Even though most high-frequency economic data releases in October and November disappointed, stage 6 blackouts at a time when factories were finalising inventories before closing for the festive season were most likely the straw that broke the

camel’s back,” it said.

It added that its macro-model indicates a 0.4% quarter-on-quarter contraction in real GDP growth in the Q4 2019.

“This will likely have been driven by weak household spending growth, a decline in GFCF (Gross fixed capital formation) and a slump in inventories,” it said.

Nedbank added that its full-year growth estimates have been revised marginally lower in light of deteriorating data, with 2019 growth expected at 0.3%, 2020 growth at 0.8% and 2021 growth at 1.3%.

The risk is still to the downside, given the possibility of a deep contraction in the secondary sector in Q4, it said.

A report published by the Efficient Group in December 2019 indicated that the cost of load shedding has reduced the country’s GDP growth by roughly 0.30% in 2019.

This translates to R8.5 billion of real, inflation-adjusted rand.

Presenting a system status briefing on Friday (31 January), Eskom chief executive officer Andre de Ruyter said that South Africans should expect more load shedding as the embattled power utility revises its current maintenance plans.

“Instead of deferring maintenance we intend to return to the cycle of maintaining our plants as per the original manufacturer’s guidelines,” he said.

“This is not unusual, but I think in the past we neglected to perform scheduled maintenance as required, and those legacies are now clearly coming home and causing us to have unreliable equipment.

“This will result in an increased probability of load shedding over the medium-term (18 months) as we fix the system.”

He said that Eskom would also increase its demand management efforts – including the return of ‘traffic light system’ which will broadcast the severity of Eskom’s power issues to television viewers.

“We will, unfortunately, have an increase in load shedding. We are going to have to do this in a structured, careful, managed way,” he said.

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