Power shortages were a pressing economic problem for South Africa and threatened near-term growth prospects, the Organization for Economic Co-operation and Development (OECD) said on Tuesday in a report.
"The loss of output in the first quarter, together with the prospect of extended power shortages and outages at least during the rest of 2008, has led economic forecasters to revise down their projections for real GDP growth this year by between 0.5 and one percentage point," said the report issued in Johannesburg.
This had been "a blow" to financial market sentiment towards South Africa.
The government was "preparing" the population for the prospect of substantially higher electricity prices, the report said.
An initial price increase of 14.2 percent would not be enough to cover the long-run costs of electricity production, the report added.
The National Energy Regulator of SA had awarded a further increase of 13.3 percent -- but it had warned that annual increases of 20-25 percent were expected for the next three financial years.
The report was the first assessment of South Africa by the OECD.
South Africa is currently not a member of the OECD but is among the five countries offered enhanced engagement with a view to having an opportunity to work more closely with the OECD.
Source:Xinhua
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