Africa Briefs

19 February 2020 | Economics

Moody's cuts SA’s GDP growth forecast

Ratings agency Moody's has cut its 2020 growth forecast for South Africa to 0.7%, saying the economy remained stuck in low gear due to lacklustre private sector demand at home.

Moody's, which in September had foreseen growth of 1.5%, also attributed the downgrade to the detrimental impact of widespread power outages on manufacturing and mining activity, it said in a research report released on Monday.

It also forecast economic growth of 0.9% in 2021 and trimmed its 2019 estimate to 0.3% from a September forecast of 0.7%.

Moody's noted indicators such as industrial production and purchasing managers' index (PMI) data indicated industrial activity remained weak. "Business and consumer sentiment has also declined over the last two years," it said.

The ratings agency left South Africa on the brink of "junk" status in November last year after it revised the outlook on the country's last investment-grade credit rating to "negative."

The central bank expects economic growth of 1.2% in 2020, higher than the International Monetary Fund's forecast in January of 0.8%. The country needs growth of at least 3% to tackle soaring unemployment and poverty and lure back investors. – Nampa/Reuters

Zim central bank leaves rates unchanged

Zimbabwe's central bank left its benchmark interest rate at 35% on Monday, citing moderating inflation, as it looks to print more local currency and limit the use of foreign currencies.

After suspending publication of annual inflation data, which economic analysts put at 525% in December, authorities will resume printing the figures next month.

Governor John Mangudya was bullish on inflation, projecting that annual price growth would dip below 50% by the end of the year. Monthly inflation fell in January to 2.23%.

"Most of the inflation is caused by non-monetary factors. That is expectations - that 'I lost money in 2008'," Mangudya said. "This is a once-beaten, twice-shy scenario. These are things that shape inflation in Zimbabwe."

Seeking to reassure investors, the governor said foreign currency accounts held by companies, donors and individuals were safe, while businesses like mines would continue to receive a portion of their export earnings in dollars.

The central bank governor said he still saw economic growth at 3% in 2020, citing improved rainfall since mid-January. – Nampa/Reuters

Egypt welcomes first UK flights since 2015

Egypt's Sharm el-Sheikh has welcomed the first British charter flights since 2015, when the Islamic State group's bombing of a Russian airliner dealt a devastating blow to the Red Sea resort.

Britain halted flights to Sharm el-Sheikh following the attack, which killed all 224 people on board the plane that took off from the resort, long popular with British tourists.

After multiple airport inspections and visits by aviation security experts, Britain announced in October that it was lifting the flight restrictions.

Egypt has since sought to lure tourists back, boosting airport security and allowing international inspections of security procedures there.

Egypt's tourism industry has shown signs of recovery in recent years with arrivals reaching 11.3 million in 2018, compared with 5.3 million in 2016. – Nampa/AFP

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