According to the South African Reserve Bank’s (SARB) Financial Stability Review, load shedding is expected to detract two percentage points from the country’s overall economic growth this year.
Furthermore, SARB also states that load-shedding may add 0.5 percentage points to headline inflation in 2023. This is because the high operating costs of running diesel generators are passed to consumers, and higher rates of wastage and spoilage, especially along food value chains, lead to possible goods shortages.
The reserve bank also noted that load shedding will likely adversely impact other macroeconomic variables. These include causing a contractionary effect on growth that could hamper a sustained recovery in employment—causing unfriendly investor sentiment which would raise South Africa’s risk premium and pressure on the exchange rate.
“The transition of households to alternative energy sources is likely to widen the already skewed income and development…