It’s not a question of ‘if ’ but ‘when’ Moody’s will downgrade the country’s sovereign rating to “ ju n k ”.It’s the only ratings agency of the big three that hasn’t downgraded the country.Economist Mike Schussler says they will probably announce a downward adjustment by Ma rch 27.“If that doesn’t happen, it will probably be on the 20th of November.”
Moody’s peer agencies, Fitch and S&P Global, downgraded South Africa as far back as 2017.Adding to the gloom, Schussler said: “We have a big problem on our hands with multiple industries taking a dive. We’re starting to see that the Eskom bonds are not guaranteed.
“They are producing the least amount of power in 17 years and with the Land Bank being downgraded to junk status, it proves that we are in a very difficult time period.”As for the local supply chain and logistics sector, Schussler pointed out that “the 9% decline in the road freight industry is the worst it’s been since the great recession in the world in 2008-2009.
“Rail is down 5.7%, and although I haven’t received all the shipping and aircraft data, figures from last November show a severe decline as well.”
Fortunately, there’s also a brighter side to the country’s economic prospects.According to Schussler warehousing performance is expected to improve as products are being stored for longer periods.On the minerals side, he said that despite the gold price doing well, other commodities like coal and iron ore were not where they needed to be.
“It’s a concern because these are things we transport more of in the industry.”He predicts it could take at least three years before things get better.He also stressed that solutions had not yet been set in place for struggling state owned enterprises.“A significant amount of time needs to be spent to fix the struggling economy. We need all hands on deck.
“The good news is that we’ve been down this road for six years now and we’re starting to see the movements that were needed from politicians a while back. This year we hope to see people brought to book so we can recover losses and investors can regain confidence in South Africa .”