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<\/a><\/p>\n\u201cThe COVID-19 health crisis will create additional and even more substantial headwinds to GDP growth,\u201d S&P analysts led by London-based Ravi Bhatia wrote in a report.<\/p>\n
The downgrade casts further gloom on South Africa. Last month, the country\u00a0lost\u00a0its Moody\u2019s Investment Services investment-grade credit rating more than 25 years after it was first awarded.<\/p>\n
Meantime, the rand has slumped 23% in 2020, the second-most of any major currency tracked by Bloomberg after Brazil\u2019s real.<\/p>\n
\u201cTough decisions have to be made and collaboration between government, business, labour and civil society remains vital in order to contain the spread of Covid-19 and ensure sustainable economic recovery,\u201d South Africa\u2019s National Treasury said in a statement in response to the rating decision.<\/p>\n
The government is \u201cdisappointed\u201d by the move.<\/p>\n
S&P said South Africa\u2019s economy will probably shrink by 4.5% this year. While the government\u2019s decision to go into a strict lockdown relatively early could limit the health impact, it\u2019s adding to the financial hit.<\/p>\n
Even before stay-at-home orders, the central bank forecast South Africa\u2019s economy would contract for the first calendar year since the global financial crisis in 2009.<\/p>\n
\u201cThe broader economic fallout will be very difficult to handle,\u201d Bhatia said.<\/p>\n
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