South African economy has dampened - economist
The main reason the impact of load shedding in South Africa is lowering is because households and businesses are moving away from Eskom.
This is according to a Professor of Economics at the University of North West, Waldo Krugell.
He was reacting to the announcement that the repo rate will remain unchaged.
The Reserve Bank's governor Lesetja Kganyago on Wednesday said they expect load shedding to have a smaller impact on the economy.
Krugell says the electricity availability factor is remaining low.
"Whether its rooftop cellular, or other sorts of renewable energy, that is the main reason, we become insulated from the impact of loadshedding by spending a lot of money ourselves.”
Krugel says the reason SARB kept the repo rate the same, is because it is not clear that inflation is trending down.
He adds that although food inflation has slowed, prices of groceries remains high.
"I think the policy committee worries that there might be renewed upward pressure on prices, that is why they can’t lower interest rates yet and they have to wait a bit and keep it unchanged".
"We are already worrying that the El Nino and drought is going to have an impact on soybeans, sunflower oils and other crops,” he says. “Maybe those impacts won’t be that big, but it causes a little more upward pressure on food prices than we'd like to see".
Krugell added that the country's economic outlook has dampened.
"The negative impact of households being under pressure, can clearly be seen in the consumer confidence numbers, declines in new car sales and the low sales in retail. That side of the economy is struggling due to high prices and high interest rates".
ALSO READ:
