It’s not looking good as SA’s economic woes signal recession

The nasty concoction of rising fuel prices and no end in sight to the current load shedding misery ensures murmurs of a looming recession only gather speed.

Should the load shedding continue at this level – and everything points to this for at least another month at levels as high as stage 6 – then we are heading towards a recession and a probable downgrade when it comes to the ratings agencies, many predict.

ALSO READ: SA economy hammered by load shedding, municipal tariffs and fuel prices

In a research note at the start of the month, Investec chief economist Annabel Bishop warned: “A couple of days of stage 6 load shedding in one year will neither derail economic growth, nor credit ratings’ outlooks for South Africa, but persistent severe load shedding will – while South Africa enters a worsening global economic environment in the second half of 2022, as well.”

Meanwhile, brokerage Nomura Holdings said “many major economies will enter recessions over the next 12 months amid tightening government policies and rising living costs, pushing the global economy into a synchronised growth slowdown”.

It added: “Signs that the world economy is entering a synchronised growth slowdown, meaning countries can no longer rely in exports for growth, have prompted us to forecast multiple recessions.”

Chief economist at Stanlib Kevin Lings told Eye Witness News: “It can start to compound as these pressures mount and we are in that type of environment because we were just talking about this petrol price hike.

READ MORE: Energy crisis: Double whammy as fuel price and load shedding hit South Africans in the pocket

“On its own, it would be a significant shock but put it all together, the psychology around load shedding, petrol for individuals, service delivery and water outages.

“It all just weighs on psychology and people make decisions around spending money and taking on credit.”

It’s bleak – we all know that. The actions we take – or fail to take – will determine where we are heading.

It’s not looking good, though.