Moody’s: South Africa unrest will prove costly for broader economic activity

PUBLISHED: Thu, 15 Jul 2021 16:43:00 GMT

LONDON, July 15 (Reuters) – The current unrest in South Africa will likely prove costly for the country in terms of damage to property, dampening subdued confidence and weighing on broader economic activity, ratings agency Moody’s said on Thursday.

The continent’s most industrialised economy has been gripped by some of the worst violence in decades after the jailing of former President Jacob Zuma. The spate of arson and looting has destroyed hundreds of businesses and killed at least 70 people as the spasm of violence began to ebb on Thursday.

“The recent escalation of violence in several regions represents a manifestation of South Africa’s exposure to social risks inherent in its credit profile, stemming from the high levels of income inequality and unemployment, particularly among the youth,” Aurelien Mali, a senior credit analyst at Moody’s, told Reuters.

“A protracted period of unrest would further complicate an already difficult challenge the authorities face in progressing the structural reform agenda, restoring the health of public finances and reviving longer-term growth prospects.” (Reporting by Karin Strohecker; Editing by Toby Chopra)

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