RATINGS agency Moody’s said on Monday that it had lowered its forecast for South Africa’s 2019 economic growth to 1.0 per cent from 1.3 per cent.

Lucie Villa, Moody’s lead sovereign analyst for South Africa, wrote in a research report that the cut was due to the country’s first-quarter contraction, which had dented the government’s revenue and policy options.

“The quarterly decline, the largest in 10 years, is credit negative for the Government of South Africa’s (Baa3 stable) revenue and policy options.

“The first-quarter contraction presages low growth in the year as a whole,” Villa added.

Moody’s is the last of the big three international credit firms to rate South Africa at investment grade.

President Cyril Ramaphosa’s efforts to revive South Africa’s economy were dealt a blow last week when data showed gross domestic product had contracted by a quarterly 3.2 per cent in the first three months of 2019, the largest contraction in a decade.

Ramaphosa’s African National Congress (ANC) is also in the midst of a row over the central bank’s role, which has rattled financial markets.

If Moody’s were to relegate South African debt to “junk” status, billions of dollars could leave the economy, analysts say. (Reuters/NAN)

– June 10, 2019 @ 15:45 GMT |