Christchurch, Load shedding and Brexit
Christchurch, Load-shedding and Brexit.
President Cyril Ramaphosa, in a statement on Sunday, said that some of the electricity shortfall had been caused by cyclone damage to the Mozambican transmission line to South Africa.
The past week will be remembered for the tragic terrorist attacks targeting Muslims in the New Zealand city of Christchurch, which killed 50 people. Mayor of Christchurch, Lianne Dalziel, said the gunman wanted to target Christchurch and New Zealand “because we are a safe city and a safe country”. Just hours after the massacre dominated global news headlines, South Africa joined a host of other countries in condemning the attack.
Locally, South Africans reeled from yet another round of load shedding over the weekend. President Cyril Ramaphosa, in a statement on Sunday, said that some of the electricity shortfall had been caused by cyclone damage to the Mozambican transmission line to South Africa from the Cahora Bassa hydroelectric generation station. Minister of Public Enterprises Pravin Gordhan said, “We agree with South Africans that the continuation of frequent load shedding, and in particular Stage 4 load shedding, is unacceptable and disruptive to our economy.”
Economists estimate that the SA economy lose around R1bn per load-shedding level per day. Although it will be difficult to determine the exact amount involved, the impact is felt particularly by small and medium enterprises (SMEs). The SME sector is the engine that creates work for the unemployed. With the current round of blackouts, South Africa not only faces economic difficulties, but also major job losses.
News influencing the global economy the past week was the series of votes undertaken by the British Parliament to clear a path toward Brexit, which is scheduled for 29 March. How and when the United Kingdom’s withdrawal from the European Union will take place remains uncertain. Lawmakers rejected Prime Minister Theresa May’s proposed withdrawal agreement for a second time. Parliament then voted against leaving the EU without a deal, in any circumstance, at any time. Finally, a large majority voted to allow a short delay in the Brexit process, though any delay would require the unanimous approval of the 27 other members of the EU. The uncertainties persist.
In the US, consumer prices rose 1.5% in February compared to the same month a year ago, falling from January’s 1.6% pace. Core inflation, which excludes food and energy prices, fell to 2.1% from 2.2% the prior month. Slowing growth and falling inflation are giving the Fed ample reason to remain on the monetary side-line over the short term.
The South African currency firmed last week as predicted. Demand for emerging market currencies lifted on reports that China and the United States had made more progress with their trade talks. Analysts expect the rand to remain volatile as it reacts to global factors, concerns over the domestic economy and the effects of load shedding.
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