As if the prospects of Stage 8 loadshedding aren’t dire enough, South Africans must brace themselves for two other major economic challenges in 2023 over and above the shortage of electricity.
The challenges are higher inflation; higher interest rates and a slump in global economies that affects our exports in a big way, and these predictions come from Nedbank economist Liandra Da Silva.
Da Silver was part of a round table media panel discussion set up by Nedbank on SA Economic Prospects: Unpacking the year ahead. The discussions focused on business growth opportunities in the context of Eskom and load shedding and the economic environment that prevails in South Africa at the moment and going forward into 2023.
The panelists also addressed digital and eCommerce Solution with cybercrimes expected to increase in 2023 partly because of longer hours of load shedding during the session attended by media and other stakeholders in Sandton yesterday morning.
Among the panelists were Mark Boshoff – Head of Transformation and Climate Resilience Strategy at the bank, Charlene Munilall – GM Devices, MTN Group and Deon Geyser – CEO, Liquid Telecoms.
Da Silver said the energy crisis poses a significant threat to our economic growth and that load shedding is hurting mining and manufacturing industries, our main exporters with Eskom’s electricity availability factor currently standing at 53% versus the global average of 86%, making it even harder for businesses to thrive under these conditions.
She said the global economic slow growth will weigh on South Africa’s trade performance as most countries we trade with, are battling higher inflation because of shortages in energy, fertilisers and other materials caused by the war in Ukraine among other factors.
However, not all is doom and gloom for South Africa, she said. For starters the local domestic economy was resilient despite many shocks in 2022. Also, food inflation remains a sore point here but globally prices have fallen significantly and the trickle down effect could be felt locally in months to come.
“Global food prices have turned the corner and are now shrinking on a year-on-year basis. With inflation close to 7%, the Reserve Bank will push through one more rate hike because the rate hike pattern starts coming down around May 2023,” said Da Silva.
Then South Africa could see interest rate hikes easing for the rest of the year and this could provide the much needed relief to cash-strapped consumers.
Asked if all the challenges faced by business because of load shedding are being mitigated by the National State of Disaster announced by President Cyril Ramaphosa during his Sona in Parliament last week, the response from the banking sector was that so far they too are in the dark on how this is going to work.
Nedbank’s Mark Boshoff said unlike the State of Disaster during the pandemic where banks had prepared rescue packages for businesses, this time there were no preparations in place and that perhaps Minister Enoch Godongwane would map the way forward and give clarity in his Budget Speech on Wednesday.