Johannesburg/Bloomberg

Economy

Moody's sees South Africa rate cuts looming to support economy

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The rating agency said that the economy of Africa’s most-industrialised country will probably expand one per cent this year and 1.5 per cent in 2020.

Sunday 09, June 2019

(Bloomberg) --Moody’s Investors Service sees South Africa’s central bank cutting its interest rate to support the economy.

While the Monetary Policy Committee (MPC) decided to maintain the repurchase rate at 6.75 per cent in May, two of the five MPC members favoured a 25 basis-point cut.

Similarly, the bank slashed the nation’s economic-growth forecast to one per cent from 1.3 per cent previously.

President Cyril Ramaphosa’s new administration faces the challenge of boosting confidence in the economy as it confronts a growing fiscal deficit and escalating debt that are risking South Africa’s final investment-grade credit rating at Moody’s.

The economy shrank the most in a decade in the first quarter as mining and manufacturing contracted, business sentiment remains subdued amid policy uncertainty and the absence of meaningful reforms.

Moody’s said that South Africa faces complex economic problems and the task of reviving the economy will be challenging and reforms will take time to show effects.

 

TAGS : Moody’s, President Cyril Ramaphosa, MPC

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