Durban - South African economist Professor Bonke Dumisa said that the decline in the GDP in the last quarter of 2022 was not unexpected, but if the country experiences another drop, a technical recession could be on the cards.
Dumisa was speaking to IOL following a release from StatsSA on Wednesday, which stated the GDP declined by 1.3% between October and December.
Seven of the ten measured industries shrunk during this period, according to StatsSA.
The South African economy grew by O.3% from the 2019 pre-pandemic reading of R4,58 trillion.
Six industries did not recover to pre-pandemic levels, with the construction industry taking the hardest knock.
“Construction is the worst in shape, remaining 23,1% smaller than what it was before the pandemic. In fact, construction’s woes started way before Covid-19. A shadow of its former self, 2022 marked construction’s sixth consecutive year of economic decline,” the StatsSA report said.
Load shedding was cited as one of the causes of the stagnant economic growth, both by StatsSA and Dumisa.
The country had 81 days of load shedding in 2022, 48 in 2021 and 35 in 2020, according to data collected from the Eskom se Push mobile application.
“This contraction in the economy is not something we did not foresee. A lot of us in the industry knew this was coming. It's not guess work.
“Load shedding has a severe impact on several industries. For instance, despite the fact that CPI fell, food prices have increased to a six-year high.
“When you look at the numbers for the different industries, they are not inspiring at all and shows the direction we are heading. Even though these are not the complete figures, it does not look promising,” Dumisa told IOL.
The only logical step from here would be to solve the load shedding crises, but as recent revelations have taught, the issue is far more complex than what appears on the surface.
Deep dives by the Daily Maverick have found that a number of cartels are at work at Eskom, stealing billions in taxpayer money.
Former Eskom chief executive officer Andre de Ruyter also made mention to a couple of Cabinet ministers, who were not named, that he knew about these cartels.
De Ruyter told Annika Larsen during an interview on TV that he had a discussion with said minister about the levels of theft and corruption at Eskom.
He said the minister did not act on the information.
De Ruyter also dropped a bomb by saying that the ANC, which has most of its members deployed in decision-making government positions, used Eskom as a feeding trough.
After his interview, the ANC called out de Ruyter for his remarks and said he must show evidence.
It was uncovered that the former CEO briefed the national police commissioner Fannie Masemola about his findings.
De Ruyter has since decided to leave the country due to safety concerns, My Broadband reported.
But Dumisa said that if this power play between our key individuals continues, the load shedding crisis will never be solved, which means the economy could contract further.
“We are seeing it happening all over the world, not just in SA. But even though there are outside factors affecting us, we need to solve the issues we have amongst ourselves.
“If load shedding continues, we could experience another decline, and then we will be in what’s called a technical recession,” Dumisa added.
IOL