Moody's cuts South Africa's 2020 GDP growth forecast to 0.7 percent

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.

State-owned utility Eskom produces more than 90% of South Africa's electricity, but its ailing fleet of coal-fired plants have struggled to keep up with demand, leading to periodic crippling power shortages. Mines across South Africa shut down in December after flash flooding triggered the most severe blackouts in more than a decade, threatening the key export sector.

President Cyril Ramaphosa, who is under pressure to quicken the pace of reform, said in an annual address to parliament last week that his government would shortly issue plans to procure more power and increase generating capacity outside Eskom.

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.