South Africa’s economic growth to shrink 6.5% in fiscal year 2020-21, says Moody’s

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South Africa’s economic growth to shrink 6.5% in fiscal year 2020-21, says Moody’s

On Saturday, the 25th of April 2020, the NY-based American global credit rating agency, Moody’s, often considered as one of the top three sovereign credit rating agencies alongside S&P and Fitch, had issued a statement saying that the global rating agency had slashed its forecast for the African continent’s most industrialized economy to a decline of 6.5 per cent in fiscal year 2020-21.

As a matter of fact, latest Moody’s forecast of a steep decline in South African GDP (Gross Domestic Product) came forth days after the NY-based global rating agency had downgraded South Africa’s sovereign credit rating in to a junk territory citing lack of Government initiatives to fix up a severe power shortage alongside financial fallouts of the pandemic outbreak.

Aside from that, in its Saturday’s (April 25th) statement, Moody’s had also added that S. Africa’s latest rescue bill of roughly $26 billion or $5 trillion South African rand from the International Monetary Fund (IMF) would likely to make its public finances more vulnerable to further weakening, while the IMF relief bill that came up without any obligations, could curb out the Government’s ability to proffer relief for the state-backed firms.

Besides, earlier this month, Moody’s had predicted that the S. Africa’s GDP would likely to contract by 2.5 per cent for the fiscal year ending on March 2021, however, the American rating agency had also added in a research report on Friday (April 24th) that the highly-developed market-oriented economy of South Africa housing an erudite human development index of 70.3 (High), would recover by 4.5 per cent next year.