Load shedding, strike action and rate hike in HORROR week for South Africans

South Africans are in for a dire next couple of days - and weeks - with THREE bouts of what can only be described as more horrific news.

Sep 19, 2022 - 15:30
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Load shedding, strike action and rate hike in HORROR week for South Africans

South Africans are in for a dire next couple of days – and weeks – with THREE major doses of what can only be described as more horrifically bad news.

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As load shedding intensifies, unions are threatening to shut down industries and the Reserve Bank is set to hike interest rates.

The country is gearing up for what could be unprecedented levels of load shedding this week after failures at numerous power stations this past weekend forced power utility Eskom to implement Stage 6 load shedding.

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Economists at the Bureau for Economic Research (BER) said on Monday, 19 September that the power failures, along with around 7 200MW of capacity being taken offline for planned maintenance, means that half of Eskom’s total generation capacity was offline.

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According to BusinessTech, in addition, the National Union of Metalworkers of SA (NUMSA) announced that it expects a strike certificate to be issued this week which will have a huge impact on the automotive sector if it proceeds.

South Africans with debt face bad news

NUMSA is demanding a 12% wage increase from employers in the motor sector who have offered increases of between 3% and 4%.

“The date of the strike has not been confirmed. However, in the meantime, members are said to be mobilising all over the country for a total shutdown of the automotive sector,” the BER said.

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Finally, markets, economists, and analysts will be looking to central banks this week for the next moves on interest rates – with the South African Reserve Bank expected to follow the global trend by hiking rates again.

Expectations are for a 75 basis point interest rate hike on Thursday, 22 September – though the BER said that it wouldn’t be surprising if a 100bps move is mentioned by the Monetary Policy Committee (MPC).

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“Along with the majority of forecasters in the pre-meeting polls conducted last week, we expect a 75bps move by the SARB MPC. The sustained aggressive monetary policy stance by advanced central banks, notably the Fed and the European Central Bank, is an important reason why we expect the SARB to continue with a more aggressive policy stance,” it said.

“In addition, there has been confirmation of rising domestic wage pressures since the MPC’s previous meeting in July. With this in mind, another 75bps hike seems justified. In fact, it would not surprise us if we again see at least one MPC member favouring a 100bps move at this week’s meeting.”

Higher interest rates will add pressure to households carrying debt.

Hold on tight, Mzansi! Hopefully there’s better news on the horizon.

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