HSBC Securities has cut its growth outlook for South Africa for 2015 and 2016 as a result of the country’s “deepening and prolonged energy crisis”, lowering its gross domestic product (GDP) growth forecast for this year to 1.6%, from 2% previously, and to 1.9% next year, from 2.2%.

The forecasts are also below current market consensus of 2.3% and 2.5% for 2015 and 2016 respectively, as well as the International Monetary Fund’s (IMF’s) newly revised outlook for Africa’s second-biggest economy of 2.1% and 2.5% – the IMF updated its GDP outlook in late January.

In a note released on Monday, economist David Faulkner writes that, while the dramatic fall in oil prices should have provided a sense of optimism at the start of 2015, the prospect of frequent load shedding would “weigh heavily on confidence, deter investment and negatively impact economic activity and export performance, particularly in energy intensive sectors of the economy”.

“Without a stable supply of energy, South Africa's rate of potential growth collapses,” he added.

Faulkner says, while the crisis is fundamentally the outcome of demand and supply trends, the immediate cause has been the sharp rise in unplanned breakdowns and equipment failures across Eskom’s aging fleet, mainly as a result of a decision to postpone critical maintenance.

The construction setbacks at the Medupi, Kusile and Ingula power projects are also highlighted, with Faulkner noting that electricity was initially expected to flow from the projects during 2013.

Instead, not even the first unit at the 4 788 MW Medupi power station has come into production, with EE-News reporting yet another delay to the synchronisation of the Unit 6, which, at one stage, was expected to be synchronised in late 2014.

The synchronisation schedule, the reports says, has slipped from mid-February to the end of March and comes after Eskom confirmed in January that Kusile Unit 1 will only enter commercial operations during the second half of 2017 – a major schedule slippage from earlier indications that the 800 MW unit could be operating during the course of 2016.

“A reliable and secure supply of energy is a pre-requisite for growth. South Africa's fragile energy supply, which has severely constrained the country's growth potential for several years, has reached crisis point,” Faulkner writes.

However, besides the electricity crisis, he also expects South Africa’s growth outlook to be constrained by weak consumer spending, which HSBC sees persisting despite the oil-price windfall.

In addition, beyond the negative impact of the energy crisis on energy-intensive exports, South Africa's export prospects would face headwinds as a result of weak external demand and subdued global growth.