The Economy Heavy Weather
Moody’s, the last of the ratings agencies to hold our debt rating at investment grade, has cut its growth forecast for the dear old SA economy to 0.4%, leading to fears that it may downgrade our rating as soon as its next review on 27 March, despite Tito’s stalwart performance at last week’s budget speech, in which he announced public sector wage cuts of R160bn. Solid, but not enough to offset the ballooning deficit, which will rise to 6.8% this fiscal, and the debt trajectory, which will hit 71.6% of GDP by 2023. Covid-19, in the meantime, has hit these shores, even as it creates turmoil on the international markets, where the rand took a beating, sinking to four-year lows this week. No wonder that Business Confidence, as measured by the Bureau of Economic Research, has fallen to a 21-year low, from to 18 from 26 in the three months through December. And this was before the news that South Africa’s economy officially went into recession in the fourth quarter of 2019, shrinking by -1.4%.
Comment: We’re in the teeth of a perfect storm right now. Shorten sail, keep pumping, and let’s ride this one out. One day we’ll find calmer waters.