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South Africa's Private Sector Shows Signs of Growth in April as Power Crisis Eases

13:24, 6 May 2024

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Recently, South Africa has been facing a severe energy crisis that has resulted in frequent and prolonged blackouts, known locally as load shedding, as a precautionary measure to prevent a complete collapse of the national power grid. The crisis has affected almost every aspect of life in South Africa, including the country's economic growth.

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The South African private sector experienced a modest rebound in April, driven by increased business confidence and a reduction in power outages, a survey showed on Monday.

The S&P Global South Africa Purchasing Managers' Index (PMI) rose to 50.3, indicating a return to growth after several months of contraction.

"Some of the headwinds that have held the private sector back recently showed signs of easing in April, with reduced load shedding (power cuts) and a lesser degree of supply-chain delays signalled," said Andrew Harker, economics director at S&P Global Market Intelligence.

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Additionally, improved business sentiment, fueled by optimism surrounding the upcoming general elections, encouraged companies to expand purchasing activity and staffing levels, according to Harker.

He also highlighted that some companies anticipate further improvements in demand following the May elections.

Eskom, the state power utility, reported a significant improvement in the performance of its power stations, allowing for a reprieve from load shedding throughout April. This positive development is expected to continue in the coming months, offering further support for economic recovery.