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Govt admits power problems hurt GDP growth

Nhlanhla Nene says that although Eskom is making swift progress, the economy is suffering.

FILE: Finance Minister Nhlanhla Nene. Picture: GCIS.

JOHANNESBURG - Finance Minister Nhlanhla Nene has admitted that continued load shedding has impacted significantly on the country's economic growth this year.

Nene has told the National Assembly that although Eskom is making swift progress, the economy is suffering.

A Rand Merchant Bank survey also shows that business confidence has declined following a temporary improvement at the beginning of the year.

The survey - conducted by the Bureau for Economic Research - shows business confidence fell to 43 points in the second quarter compared to 49 in the first three months of the year, citing power problems as a main contributor.

Nene says the growth forecast has been adjusted due to the power problems.

"Our estimates indicate that the power shortages as a result of electricity supply constraints will shave between 0,5 percent and 1 percent from annual GDP growth."

He says the growth target was higher several months ago.

"Had electricity not been a binding constraint on the economy, our real GDP growth could have ranged between 2,5 and 3 percent."

The survey also found that concern over rising prices and jitters over electricity tariffs were also worrying the business community.

Meanwhile, Eskom says stage two load shedding is likely to last until about 10pm tonight.

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