Johannesburg - Moody’s rating agency has issued a report in which it warns that the worst drought on record in South Africa is aggravating the ongoing economic slowdown, threatening near-zero growth if not a recession in 2016.
As a result, Moody’s has revised down its growth forecast to just 0.5 percent, which is lower than the World Bank’s 0.7 percent figure. This it says is because of the drought and power shortages.
“Despite the expected activation of substantial electricity supply from newly constructed power plants next year, just 1.5 percent in 2017.”
The ratings agency notes while agriculture represents only a small – less than 4 percent – share of both gross domestic product and employment as well as accounting for under 11 percent of exports, negative spillovers from the sector will increase food inflation and imports and motivate policy responses that will further slow already sluggish growth.
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