Good morning. If the past year was a tough economic battle, then we better strap in and buckle up for the year ahead. The International Monetary Fund has warned that the world faces “a tough year, tougher than the year we leave behind.”
The United Nations’ financial agency expects a third of the global economy to contract and there is a chance that 25% of global GDP grows by less than 2% – which it defines as a global recession.
IMF chief Kristalina Georgieva cited the reason for the economic slowdown as the three largest economies – the US, EU and China – are all slowing down simultaneously.
Slow growth and high food prices create an economic storm in South Africa
However, there is some good news for South Africa with inflation expected to break further after peaking in July at a 13-year high. But domestic GDP growth is unlikely to get a jump start from those numbers despite signs the economy may have grown by as much as 2.5% last year.
Food inflation increased to 12.8% from 12.3% and South Africans will remain at the mercy of Eskom as rolling blackouts continue to disrupt economic activity and our daily lives.
Eskom is a study of what has gone wrong with SA
Financial Times writer David Pilling argues that Eskom offers a miniature window into some of South Africa’s larger problems, for a power utility that is unable to keep the lights on is “draining the economy of its lifeblood”.
“Without reliable power, South Africa cannot generate the economic growth needed to tackle the problems of poverty and social injustice that are a festering legacy of apartheid,” writes Pilling.
Eskom has beefed up its security amid sabotage and theft
The power utility has increased its security measures at its power plants as it continues to battle sabotage and corruption, which has led to unprecedented load-shedding.
The SA national defence force was deployed at four power stations in Mpumalanga in December after the situation became dire. There have been reports of contractors colluding with Eskom employees to sabotage plants so that they can do the repair work while the “coal mafia” has sent sub-par coal or rocks to power plants.
The new security measures include the screening of all contracts and the employees of contractors at Eskom sites. Some companies are also being investigated.
What’s happening in the markets?
In the Asian markets, Hong Kong’s Hang Seng, the Shanghai Composite, and Japan’s Nikkei were all trading in the green at 05:57 am.
European stocks closed mixed on Monday with France’s CAC40 (1.87%) and Germany’s DAX (1.05%) ending higher while the FTSE 100 dropped 0.81%.
On the currency front, the rand is currently trading at R16.93 against the greenback. (6:00 am)
Here’s what else you need to know:
Top News
- Man arrested after attorney, 50, shot dead in Tshwane – News24
- SA health dept cautious on travel requirements from China amid Covid-19 spikes as expert says no need to panic – Times LIVE
- Another uphill year brewing for a South African Parliament that dropped the ball – Daily Maverick
SA Business
- OR Tambo airport had successful peak season, despite fuelling glitch says Mbalula – Times LIVE
- JSE starts 2023 where it started 2022 in rand terms, uncertain times ahead – Daily Maverick
- Eskom’s big diesel problem – government has a suggestion – BusinessTech
Global Business
- Five things to watch in Asia stocks after $5-trillion wipeout – DM/Bloomberg
- China’s Economy Ends Year in Slump as Covid Infections Surge – Bloomberg
- Dow futures tick higher, Fed minutes in focus – Investing.com
