S&P maintains South Africa’s junk status, warns of Covid-19 impact on growth
S&P Global Ratings has maintained South Africa’s sub-investment grade, warning that the impact of Covid-19 could see the economy shrink by 4.5{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} this year.
According to a report released on Friday, the country’s long term foreign and local currency debt ratings is kept at ‘BB-’ and ‘BB’ respectively. The agency maintained its stable outlook.
“COVID-19 will weigh heavily on GDP growth given the strict domestic lockdown that has shut down much of the economy, the markedly weaker external demand outlook, and tighter credit conditions,” S&P said.
“As a result, we now project the economy to shrink by 4.5{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} this year.”
National Treasury said in a stated it has noted the report, stressing that government had acted decisively to prioritise the health and lives of all South Africans. They pointed at a risk-adjusted approach to reopening the lockdown, and further easing of restrictions expected from 1 June.
South Africa’s sovereign credit rating is already ranked at ‘junk’ by Moody’s and Fitch.