HSBC Securities has cut its growth outlook for South Africa for 2015 and 2016 because of the country’s “deepening and prolonged energy crisis”,
lowering its gross domestic product (GDP) growth
forecast for 2015 to 1.6%, from 2% previously, and to 1.9% in 2016, from 2.2%.
The forecasts are also below current market consensus of 2.3% and 2.5% for 2015 and 2016 respectively, as well as the International Monetary Fund’s (IMF’s) January-revised outlook of 2.1% and 2.5%.
Economist David Faulkner writes that early optimism from the fall in oil prices has been depressed by the prospect of frequent load shedding, which would affect confidence, deter investment and negatively impact economic activity and export performance.”
Setbacks at Medupi, Kusile and Ingula have delayed electricity provision expected since 2013. Medupi power station’s Unit 6 synchronisation has also been delayed from late 2014, then mid-February, to late March.
Eskom has also confirmed that Kusile Unit 1 will only enter commercial operations during the second half of 2017 rather than during 2016.
In addition, he expects South Africa’s growth outlook to be constrained by weak consumer spending, and exports threatened by weak external demand and subdued global growth.
