Moody's lowers South African growth forecast after Q1

File: If Moody's were to relegate South African debt to "junk" status, billions of dollars could leave the economy, analysts say.

File: Moody’s is the last of the three big international ratings agencies to have South African debt at investment grade.

AFP/Emmanuel Dunand

JOHANNESBURG - Ratings agency Moody's said on Monday that it had lowered its forecast for South Africa's 2019 economic growth to 1.0 percent from 1.3 percent after it said a first-quarter contraction had dented the government's revenue and policy options.

Moody's is the last of the big three international credit firms to rate South Africa at investment grade.

President Cyril Ramaphosa's efforts to revive Africa's most advanced economy were dealt a blow last week when data showed gross domestic product had contracted by a quarterly 3.2 percent in the first three months of 2019, the largest contraction in a decade.

READ: Moody's warns of SA recession

The African National Congress (ANC) is also in the midst of a row over the central bank's role, which has rattled financial markets.

Quarterly decline, the largest in 10 years, is credit negative for the Government of South Africa's (Baa3 stable) revenue and policy options, Lucie Villa, Moody's lead sovereign analyst for South Africa, wrote in a research report.

"The first-quarter contraction presages low growth in the year as a whole," Villa added.

If Moody's were to relegate South African debt to "junk" status, billions of dollars could leave the economy, analysts say.

Source: Investing.com - South Africa

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IRESS