LETTER: Moody’s projected growth is a fantasy
GDP rise of 1% is impossible as six months of the year have gone
I had a good chuckle on reading an article that read: “Moody’s patience is wearing thin” with SA and it has now dropped its projection of our GDP growth for the year to 1%. Wow, it only took Moody’s two years to follow what the other two main ratings agencies, the World Bank, the IMF and many others have been telling us for ages.
Moody’s has finally realised that the government’s policy objective to boost economic activity while consolidating its physical position will prove even more difficult in the low growth environment. I still can’t believe it took the agency two years to get there.
What kind of methodology is Moody’s using? How can we possibly end the year with GDP growth of 1% when six months of the year have already gone by, we have already had a 3.2% economic contraction in the first quarter and it seems likely that the second quarter will be negative too?
To get to 1% annual growth SA’s GDP will have to grow 5% or more over the remaining six months of the year to make up for the first half. To me that is baloney.
Jean Michel Bouvier