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South Africa records marginal Q1 growth on back of power crisis

Published

1 year ago

June 6, 2023

Despite a steep power crisis, South Africa recorded marginal economic growth in 2023 which helped it escape recession in the period.

According to the official state data source, eight of the ten industries experienced growth between January and March, with manufacturing and finance, real estate, and business services contributing the most. Manufacturing output increased by 1,5%, adding 0,2 of a percentage point to GDP growth. The production of food and beverages was the main catalyst behind the industry’s positive showing.

The transport sector was inspired by the rise in rail freight and rail passenger transport while the storage & communication industry expanded by 1,1%.

Finance, real estate & business services grew by 0,6%, mainly driven by financial intermediation, insurance & pension funding, real estate and business services. Personal services also increased by 0.8%, owing to increased community service activity.

South Africa’s Statistician-General, Risenga Maluleke said food and drinks manufacturing had performed particularly well, partly because the sector was not as electricity-intensive as other types of manufacturing.

“Household consumption was driven largely by restaurants and hotels, and when you look at that, with load-shedding (power cuts), where do people get their food? They have to call on Uber Eats or order from restaurants,” Maluleke said.

Meanwhile, experts have argued that the economic situation remains dire despite the marginal growth.

An economist, Jason Tuvey quoted by Reuters, said “The outlook remains bleak. Severe power cuts, tight fiscal and monetary policy and a worsening external backdrop mean that the economy is likely to merely stagnate this year.”

As one of Africa’s most industrialized economies, power outages have posed a threat to businesses and the country’s overall economy. South Africa’s state utility firm, Eskom recently announced that its power rotation had been suspended “until further notice”.

Related Topics:Economy growth Featured South Africa

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IMF mission concludes 4th loan program assessment in Egypt

Published

16 hours ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

2 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.