South Africa risks economic short circuit.

The economy that had recorded steady growth for the last decade and a more, is under threat of a short circuit, literally.

The serious shortage of power supply is considered to be the most potent threat to the country’s economic progress, by bringing down production and output. Literally, it could mean shutting down the economy.

The economy has already registered a slump of around 3% for quarter ended June 2009, and more hard knocks seem to be in store, by the look of things.

Apart from the energy problems, unemployment has become a major source or worry, prompting the Government to initiate special programs to generate jobs.

For the record, South Africa has excellent infrastructure and a world class legal system in place with business-friendly laws relating to labor, commerce, trade, etc. In spite of the plus points, the country is presently in a recessionary mode which is undoing the good done in the last decade and a half.

The country’s economic mainstay, namely, mining is stagnant, and not contributing to the national production, and domestic product to the desired level. However, the construction industry has picked up smartly, mainly because of the World Cup 2010.

One account of the shortage in power supply, several mega and minor projects are on hold, adding to the lines of the unemployed with all its attendant consequences. If things to do not improve fast, there is a risk of South Africa slipping into a severe recession, which could take a long time in coming out of. As it is, the country is in the danger zone, with a severe fall in production and consumption, and increasing unemployment.