Heavy rains will hit growth - economistComment on this story
Johannesburg - The rains in Gauteng, which have been described as the heaviest in 14 years, have not only damaged infrastructure but have hurt economic productivity due to road disruptions, Azar Jammine, the chief economist at Econometrix, said yesterday.
“These rains have been phenomenal. In the long term it can only be good but there are so many disruptions on the roads. You are getting a lot of potholes, which calls into question the wisdom of concentrating only on highways and neglecting the smaller roads,” he said.
Bank of America Merrill Lynch said persistent heavy rains in the northern parts of the country, where coal mines and power stations are located, meant more load shedding risk.
The investment bank’s local economist said continued load shedding over one quarter could cut the bank’s view of gross domestic product (GDP) growth by up to 1 percentage point, leaving its growth outlook at 1.5 percent to 1.8 percent for this year.
In his Budget speech last month, Finance Minister Pravin Gordhan forecast GDP growth of 2.7 percent for 2014, an estimate that looks in jeopardy.
Property, especially informal housing, has also been badly hit. Yesterday residents along the Vaal River in the Free State were told to take precautionary measures because the river could overflow. The Department of Water Affairs was considering opening the eighth sluice gate of the Vaal Dam to ease strain on its capacity.
“I don’t think it’s bad enough to call a state of emergency but it will cost a lot of money to repair these damages.”
On a positive note, he said the rains would soak deeply into the soil, helping farmers for another year or more.
Power utility Eskom, which implemented rotational load shedding last Thursday for the first time since 2008 due to the heavy rains in Mpumalanga soaking its coal supply, said that although the situation had improved at its Kendal station, it was still vulnerable as the rains were likely to continue into next week.
But at least it had cleared the conveyor system at Kendal, enabling it to shift coal supplies to the bunkers.
Spokesman Andrew Etzinger said the rains had affected output not only at the two power stations that experienced problems last Thursday, but all stations in Mpumalanga.
Jammine said Eskom’s electricity supply might be benefiting from the strike by the Association of Mineworkers and Construction Union, which reduced the platinum sector’s electricity consumption.
Insurers have already started to see accident and property claims pick up.
John Melville, the executive head of risk services at Santam, said the Klein Kariba Dam, which burst its walls, would add significantly to the claims. “We are also concerned about the rising of the Vaal River and that it will burst its banks,” he said.
After last year’s catastrophes, which cost insurers about R2 billion in hail claims alone, the latest incidents have given insurers a view that weather patterns are shifting, and their pricing should reflect that.
“It will result in pressure on profitability and together with other forces, this will drive up premium rates.” - Business Report