COVID-19: How Moody’s will rate SA’s lock-down?
Last week South Africa’s Reserve Bank said it expects the economy to contract by 0.2 per cent. Could the economy be in for a more severe blow now that economic activity will be put on hold for three weeks?
Tue, 24 Mar 2020 15:54:13 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- Estimates suggest a 3% decline in GDP due to the three-week nationwide shutdown
- Disruption in consumer spending on non-essential goods accounts for 30% of 2019 GDP
- Moody's downgrade likely despite government's efforts to stabilize the economy
South Africa's economy is facing unprecedented challenges as the country grapples with a three-week nationwide shutdown in response to the COVID-19 pandemic. Siphamandla Mkhwanazi, FNB Senior Economist, shared insights on the potential impact of the lockdown on CNBC Africa. Last week, the Reserve Bank projected a 0.2% contraction in the economy, but the current shutdown is expected to have a much more significant effect, with estimates suggesting a 3% decline in GDP. Mkhwanazi highlighted the substantial disruption to consumer spending on non-essential goods, amounting to 30% of the country's 2019 GDP. Additionally, disruptions in investment activity and exports are likely to further exacerbate the economic downturn. The looming decision from credit rating agency Moody's adds to the uncertainty, with a downgrade looming despite the government's efforts to stabilize the economy. While a downgrade may be inevitable, the immediate focus remains on navigating the challenges posed by the lockdown and its lasting impact on South Africa's economic growth trajectory.
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