Rating agency Moody’s has cut South African economic growth prospects to 0.7% from the 1.5% forecasted in September 2019.
Moody’s attributes the downward revision to the sluggish economy owing to a reduction in private sector demand. Further, Moody’s says that industrial production and purchasing managers’ index (PMI) remained weak.
In addition, Moody’s says that widespread power outages are affecting manufacturing and mining activities. However, President Ramaphosa reassured parliament in his national address of plans to procure more power and increase generating capacity outside Eskom.
The recent announcement saw the Rand decline by as much as 0.7% to trade above 15 per dollar.
In early February, Moody’s reviewed South Africa’s outlook from stable to negative, citing unsustainable government debt. Moody’s will review South Africa Baa3 credit rating in March.