JPMorgan in a research note on Friday said it now forecast a 0.2% decline in South Africa's 2023 gross domestic product versus a previous forecast for 0.3% growth, citing expectations for deeper power cuts.
The bank added that prolonged power cuts above the current record level referred to as "Stage 6" would worsen its current account projection beyond an already pessimistic 3% forecast for this year.
Earlier on Friday, the rand hit an all-time low before paring losses after a minister denied the country's arms control committee had approved an arms shipment to Russia, on another turbulent day for South African markets.
The rand at one point sank as low as 19.5100 to the dollar, down more than 1.6% on its previous close.
It recovered some losses after Mondli Gungubele, chair of the National Conventional Arms Control Committee, told local radio that it "didn't approve any arms to Russia" and at 1000 GMT was down around 0.9% against the dollar.
JPMorgan said in a research note on Friday it now forecast a 0.2% decline in South Africa's 2023 GDP versus a previous forecast of 0.3% growth, citing expectations that power cuts could worsen from their current level of about 10 hours a day.
"We've seen the spiraling energy crisis, really depressing economic growth expectations and concerns around state utility Eskom. ... The outlook points more towards stagnation certainly for this year," said James Wilson, EM sovereign strategist at ING.
Reuters