Ratings agency, S&P Global Ratings, projects that South Africa’s economy will contract by 6.9% in 2020, compared to its April forecast of a 4.5% contraction.
“The coronavirus situation in the country has worsened since our previous macroeconomic update, leading to a further hit to confidence, which was already low before the pandemic, amid lack of growth and concerns about the fiscal trajectory,” CGTN quoted the S&P Global.
S&P Global Ratings on 30th April downgraded South Africa’s long-term foreign-currency credit rating to BB- (junk), three notches below investment-grade, from BB. Also, the long-term local-currency rating was lowered to ‘BB’ from ‘BB+’.
However, S&P’s growth forecast is more optimistic than the National Treasury’s prediction of a 7.2% shrinkage. Treasury predicts debt to gross domestic product will breach 80% as the government borrows more to fund its response to the pandemic.
The South Africa rand has so far slumped 23% in 2020
AfDB projects that Africa’s GDP will contract by 3.4% in 2020, dropping by 7.3% from the pre-COVID19 growth projection. In addition, the bank says that cumulative GDP losses could range between $173.1 billion and $236.7 billion in 2020-2021.
For 2021, AfDB projects GDP losses could be from $27.6 billion (baseline) up to $47 billion (worst case) from the potential GDP of $2.76 trillion without the pandemic.
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