The Eskom Effect: World Bank cuts SA's growth outlook to less than 1 percent


The bank believes that Ramaphosa could effect a turnaround with structural reforms and policy certainty.

The World Bank has cut its economic growth forecast for South Africa to 0.9 percent, according to its Global Economic Prospects report, published on Wednesday. This is a decrease on the 1 percent projected in its October Africa Pulse report.

The international financial institution has likely revised its based on concerns around electricity supply and infrastructure constraints. Together, these are inhibiting domestic growth, while weaker economic conditions are also having an impact on export demand.

The report stated:

"In South Africa, growth is expected to pick up to 0.9%, assuming the new administration’s reform agenda gathers pace, policy uncertainty wanes, and investment gradually recovers."

Eskom resumed load shedding earlier than expected in January, which will have an impact on the national productivity just as the country comes out of the December holiday period.

The World Bank still sees GDP growth achieving 1.4% in 2021-22 if President Ramaphosa can implement structural reforms and address policy uncertainty, improving public and private sector sentiment in the coming months and years.

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