South African economy likely to experience technical recession as power cuts increase and uncertainty increases due to recession. Russia’s war with Ukraine is raging through global financial markets. Gina Schoeman, economist at Citibank South Africa, said the economy is likely to contract for a second straight quarter in the three months ending in September, said Wednesday at the Bloomberg Capital Markets Forum in Johannesburg.

“We hit a very high fundamental in the first quarter. In the third quarter, the outages, which we call offloading, were enough to bring that back in,” Schoeman said.

“With that, inflation spikes – the combination of that means Q3 growth is now negative, which means we are very likely to fall into a technical recession now due to factors our own local.

South Africa’s gross domestic product fell 0.7 percent in the second quarter from a downward-revised 1.7 percent growth in the previous three months, Statistics South Africa said in September.

The size of the continent’s most industrialized economy has become smaller than it was before the coronavirus pandemic following its worst flooding in nearly three decades and severe power outages.

“We actually ended the year with only 2% growth,” Schoeman said. “If we look at our average history, outside of the Covid years, things don’t go so bad.”

Commodity Boom

While South Africa’s medium-term budget, which Finance Minister Enoch Godongwana will present on October 26, could show that the country’s finances have benefited from the boom commodity explosion, export capacity problems have limited growth, according to Schoeman.

“Next week you will get another budget from South Africa that will be better than they thought just because of the commodity prices,” she said.

“There was nothing we could do to really increase our export volume, it was all the price impact, so we missed another commodity price cycle, which led to many problems. large in our locality.”

The country’s largest exporters have had to adjust their shipments due to reduced capacity of Transnet terminals. The public freight rail operator has been hit by logistical disruptions exacerbated by flooding, aging infrastructure and safety issues.