Hit by power shortages, South Africa’s economy slides into recession

AP | Widespread power cuts are blamed for pushing South Africa’s economy, the continent’s most industrialized, into recession, according to official statistics released Tuesday.

The South African economy shrank by 1.4 percent in the fourth quarter of 2019 from the previous 3-month period, after contracting by 0.8 percent in the third quarter, according to Statistics SA. A recession is commonly defined as two consecutive quarters of economic decline.

South Africa’s nationwide power blackouts are blamed for the larger than expected decline in the fourth quarter. The state-owned power utility, Eskom, has been unable to meet demand and has had to implement rotating cuts in electricity to residences, factories, mines and businesses.

South Africa’s economy grew by just 0.2 percent in 2019 and 0.8 percent in 2018, according to the statistics.

Seven out of 10 of the country’s sectors contracted in the fourth quarter, including agriculture, which dropped by 7.6 percent, manufacturing, which dropped 1.8 percent, and transport, which declined 7.2 percent.

The economic growth forecast for 2020 has been cut to 0.9 percent.

President Cyril Ramaphosa, who came to power 2 years ago, has not succeeded in achieving robust economic growth as the country has been hobbled by the power shortages, erratic rains and widespread allegations of corruption.