South Africa faces power crisis, economic slowdown

SOURCE: allAfrica.com—“South Africa: Country’s Economy Holds Up in Power Crisis—Analyst”

In his recent State of the Nation speech, South African President Mbeki recognized and responded to growing economic problems in the nation that have been further aggravated by the ongoing power crisis. Other factors that signal rough economic times ahead in South Africa are high inflation, the ever-increasing cost of food and fuel, the depreciating rand, and the threat of a recession in the United States.

To respond to the power crisis, which has hit the electricity-dependent mining sector particularly hard, the South African government plans to fund the building of generation facilities. While economic indicators are not promising, observers are not concerned that South Africa faces a recession. Rather they see economic slowdown falling short of recession as a more likely outcome for the continent’s largest economy.

FOR DISCUSSION:

Do you believe building additional generation facilities is the best use of government funds given high food and fuel prices?