Ratings agency Moody’s says the recent contraction of South Africa’s Gross Domestic Product (GDP) means the country will struggle to bring down its soaring levels of public debt.
South Africa’s debt is set to reach 80% this year, due to the impact of the record economic contraction on tax revenues. Its GDP contracted by an annualised 51 % in the second quarter of 2020. Moody’s says the downturn will intensify government’s fiscal woes, particularly its ability to generate revenue.
Meanwhile, Chief Economist at Efficient Group, Dawie Roodt says the expected rebound in economic GDP growth in the third quarter of the year will not be enough to turn around the country’s growth picture as the economy recovers from the impact of the nationwide lockdown due to the coronavirus pandemic.
Roodt says the impact of the nationwide lockdown will be difficult for the economy to recover from.
“Well certainly the reason why the economy has gone into a down spin and still in a down spin has to do with the lockdown, it’s important to understand that it’s not the virus causing it, it is the lockdown causing this, so from a quarter-to-quarter basis it may appear as if the third quarter will be better but if you stand back a little and then you will find that no the economy is actually still in very deep trouble despite the expected bounce back in the third quarter.”
In the video below, Nedbank Chief Economist, Nicky Weimar says the latest GDP figures come as no surprise
Additional reporting by Reuters
