World Bank cuts South Africa GDP forecast on Eskom fears

To below 1% for 2020.
President Cyril Ramaphosa. Image: Moneyweb

The World Bank is the first key institution to cut its economic growth forecast for South Africa to below 1% for 2020 due to electricity supply concerns.

It now expects the economy to expand by 0.9% this year, the Washington-based lender said Wednesday in its Global Economic Prospects report. That compares with an estimate of 1% in its Africa Pulse report released in October and is well below government forecasts. Its outlook for Africa’s most-industrialised economy is “markedly weaker” because it sees electricity supply and infrastructure constraints inhibiting domestic growth with weaker global economic conditions weighing on export demand.

Read: Brace for lots more load shedding

The bank’s revision comes as Eskom which generates about 95% of the country’s electricity, resumes rolling blackouts earlier than expected. The power cuts threaten to drag on an economy stuck in the longest downward cycle since 1945 and that hasn’t expanded by more than 2% annually since 2013.

The debt-laden power utility, described by Goldman Sachs Group as the biggest threat to South Africa’s economy, put the country at risk of a second recession in as many years after it implemented the most severe power cuts to date in December. Gross domestic product growth likely slowed to 0.4% in 2019, the World Bank said.

The World Bank sees GDP growth averaging 1.4% in 2021-22 if President Cyril Ramaphosa’s administration is able to ramp up structural reforms and address policy uncertainty, and if there’s a recovery in public and private sector investment.

Read: World Bank trims 2020 growth forecast amid slow recovery for trade, investment

© 2020 Bloomberg L.P.

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Can’t maintain power stations and infrastructure, can’t build power stations.

Free the market and allow the private sector to invest. This will create lots of worthwhile jobs at salaries that the country can afford.

Can’t run the country yet continues to dream of a centrally-planned socialist state.

…don’t worry Colson, unlike Eskom’s mismanagement, the NHI will miraculously be well run by the same ANC-regime.

You underestimate the collective ego of the ANC

Letting go of any form of power in any way is not something they have ever comprehended.

…. and not returning anything to the state coffers that their light fingers have taken is also not anything that they have ever comprehended either.

one of the requirements of the 2nd Industrial revolution is SUSTAINABLE energy….so it means we are actually regressing back to 1st industrial revolution…..far from the 2nd Industrial revolution and an eternity from the fourth!

The ANC and their counters have labelled it the “4th industrial revolution”

Maybe the world bank should invest in South Africa and help grow or fix the economy instead of just reporting.

The report just made the situation worse, on a day where all stock markets went up very strongly, we still went down.

Of what use is the World bank?

Does it add any value except pay a small group of bankers a fortune?

load shedding 4 5 or 6…and you would think by now that they will use “green energy”… never because then the ANC will loose there coal contracts.

Can’t build? Medupi has won a few global awards, actually one. I think the problem above all is “can’t manage anything”.

Even at 0.9% the figure seems overly optimistic. Especially when we consider that electricity demand is currently well below peak and constant loadshedding now appears to be the accepted norm which the desensitized public have come to expect. The gradual deterioration of this country and it’s economy is set to continue indefinitely.

Ok so – From 2020 no more GDP growth forecasts can be made in SA –

Only shrinkage forecasts will be possible.

Face reality !!!!!!

…similarly, I overheard a pensioner stating that his particular Investment cannot be called a “groei fonds”, but a “krimp fonds” instead 😉

Eskom se mo@r.Something else : why is the gold price rising when there’s conflict between iran and usa?

For the same reason that you go to the pub when there is conflict between you and your wife. Investors go into gold when there is conflict between countries. It does not change anything, but everybody feels better.

The rent-seeking ANC government with their allies, the labour unions and the SACP, are destroying this economy with their constant attacks on property rights. This is common knowledge. What is unknown, is the extent to which the economic decline leads to balance sheet problems for the banking system. The banking system does not stand independent of the economy. This all-out war on property rights must surely be doing damage to the collateral held by the banks.

As the Governor of the Reserve Bank looks at what is happening in Luthuli House, he must be a worried man. These fools don’t realize that they are biting the hand that feeds them, that they are consuming the goose that lays the golden eggs, that they are destroying the basis of economic activity.

Destroying the economy indeed. The World Bank however has still not officially acknowledged receiving the memos about EWC and the NHI. The next two blows to hammer more nails into the economy. Negative growth and consequent hyperinflation are the natural results to be fed from these forthcoming attractions from Lootfreely House.

This is expected in the long term: South Africa (in comparison to rest of continent) was totally over-developed and too quickly during past colonial centuries.

So now it’s for rest for African continent to play catch-up & for SA to slow down, naturally.

Maladministration is merely the manifestation of the above. Function of changing demographics. Accepted. Got to happen.

Why must SA be more modern or advanced country than rest of continent, if 90+% of SA’s population is of the same mental calibre found on rest of continent? (75 IQ ave). Logic tells me SA should be on par with rest.

Luckily the ANC & EFF are there to ensure SA’s future decline to the continental ‘mean average’. Very simplistic. Demographics. Nothing wrong with that. The way it is.

Expect electricity, water & transport infrastructure to become more “broken’ or fragmented (to be more “pc”). No rebound for 2020….just more of the same. Crystal ball now covered again.

This highly respected study puts it at 68.

https://www.sciencedirect.com/science/article/abs/pii/S0160289609001275

Mmmm, now you are getting to the “nitty , gritty” , the real true crux of the matter!! So much window dressing and PC nonsense takes place when in fact here you have something more substantial than any other reason or argument for SA’s failure ! This finding deserves extreme exploration , conclusion and of course acknowledgement so we all know what we are dealing with and how to proceed. Like that Bob Dylan song about the answer ….!

Jip – Just too clever not to comprehend how little they know

And in the mean time they blame the decay on group that built everything.

When they blame colonialism, they actually mean to blame capitalism, and capitalism saves millions of lives on a daily basis. So, if they depart from capitalism, they will kill millions of people in the process. That is the price of collectivism.

Failed State with a Barclay card!!

With our “Brave” and “Beloved” leader blaming everything that goes wrong on the pre 1994 regime we are not going to fix anything soon.

It means he does not know they themselves are the problem. He was telling people 2 days ago they are working very hard to resolve the problems.

How is he going to fix the previous regime? Hahaaa. Just talk.

SARS 2019 tax statistics on their website:
VAT collected: R324 billion
Corporate tax collected: R214 billion
Customs collected: R55 billion
All the VAT collected in this country in a year is not enough to cover Eskom’s debt of R420 bn – not by a long shot! The same goes if Government applies all Corporate tax collected plus Customs. It won’t be enough to bail out Eskom. That is how big the hole is!

This is all done by design with the ANC american partners. Am i mistaken or Did Putin offer us NUCLEAR for R100billion? We were shocked and disgusted but at that time never knew the ESKOM hole was over R400billion….Instead the US contractors at Medupi/Kusile have raped the SA tax payer. Bad engineer designs and the overpriced contractors. SASOL under american S Cornell stolen blind LAke Charles Project blunder. The USA did the same to Russia when democracy hit russia. THe military,aviation and oil companies were ransacked and the same thing has been done to RSA. Guptas also had their fun here and the tax payers financed it…..we are all sinking into poverty faster and faster.

Please name these “Americn Partners” I am curious to know what they designed.

Gopieter: I would stop blaming USA etc for SA’s mess. That blame is squarely on the SA population for letting communism and socialism take over the Country.

At least Eastern Europe put up a fight against socialism whereas the SA populace openly embraced socialism in the elections. So yes, South Africans caused this mess.

I see my comment about coming to the realisation that I’m living in just another African country which has no hope of competing with the First World and where I referenced Prince Mashele’s article from the Sowetan Times has not been published or got lost in the system.

“People must not entertain the illusion that a day is coming when SA will look like the US. Our future is more on the side of Zimbabwe, where one ruler is more powerful than the rest of the population. Even if Julius Malema were to become president, it would still be the same.”
https://www.biznews.com/africa/2016/12/22/south-africa-will-finally-be-an-african-country

If it was not published as it goes against your policies, what is so objectionable about this? In what way does it contradict your caveat: “Such comments and those showing any discrimination will be deleted and repeat offenders may be banned. There’s a fine line between slander and freedom of speech.”

Do you not like references to other competing media?

Compare SA with Rwanda:

In 94 the ANC inherited the best economy, infrastructure and skills base in Africa by far.

In 94 Rwanda had the slaughter of 800 000 Hutus and Tsutsis.

Today Rwanda’s economy is growing strongly, the murder rate is 2.5 per 100 000 people and the country is clean.

The SA economy is flatlining and the murder rate is 35 per 100 000 (SAPS figures) compared to a world rate of 7.

End of comments.

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