Rating agency Moody’s projects that the South African economy will contract by 2.5% in 2020. In a statement released last week, Moody’s mainly blamed the nationwide shutdown for the economic downturn.
The five-week lockdown threatens to reduce South Africa’s productive capacity affecting the transport, hospitality, mining, and manufacturing sectors. Further, Moody’s says the coronavirus pandemic may result in reduced household consumption.
South Africa’s sovereign credit rating has been downgraded to ‘junk’ by rating agencies such as Fitch, S&P Global Ratings, and Moody’s.
Moody’s revealed that South Africa’s fiscal deficit may hit a record 8.5% of GDP in 2020