A 'junk' South Africa is one of the Financial Times’ top predictions for 2020
- Each year, the Financial Times publishes twenty key predictions. Last year, it only got four wrong.
- This year, one of its key predictions is that South Africa will finally lose its remaining investment grade rating.
- Having "junk" government bonds could have harsh consequences for the country.
- Go to Business Insider SA's home page.
At the end of every year, the UK's Financial
Times publishes its
twenty key predictions for the next year.
Among its forecasts for 2020 is that South Africa will be downgraded to junk status.
The FT expects that Moody’s will strip SA of its investment grade rating. As it is the only agency that regarded SA as investment grade, this will finally leave SA government bonds on a “junk” ranking, which could have harsh consequences. Global investment funds who are not allowed to invest in junk bonds will be forced to sell off SA bonds. It could also result in the SA government paying higher interest rates to borrow money.
“The economy has stalled and South African Airways placed into bankruptcy protection. Eskom, the biggest state-owned enterprise, has imposed growth-sapping blackouts and cannot repay $30bn in debt. Tito Mboweni, finance minister, will have to pull out all the stops to persuade Moody’s things are salvageable. The odds must be against him,” the FT writes.
Some of the publication’s other predictions include that the US president Donald Trump will lose the popular vote in November’s US presidential election. It also expects that the US will avoid a recession and that UK premier Boris Johnson will agree a trade deal with the EU.
The FT predicts that there won’t be meaningful regulation of big tech, while Uber won’t become profitable in 2020.
The business publication's track record isn’t perfect, however. Of its twenty predictions for 2019, it got four wrong (Brexit was not stopped, populism didn’t grow in the European parliament, the US market did better than the FT expected and the Brazilian economy didn’t bounce back). This was, however, a marked improvement on 2018, when it got eight predictions wrong.
Receive a daily update on your cellphone with all our latest news: click here.
Also from Business Insider South Africa:
- Airbnb denies a report that it rejected a plan to require government IDs to sign up for the home-sharing service because it might hurt growth
- A baby black rhino was born at a Michigan zoo on Christmas Eve, a rarity for this 'critically endangered' species
- Look: The world's first hydrogen-powered superyacht was unveiled at the Monaco Yacht Show.
- For R15,000 this company says it can convert your bike into an electric one that can clock 40km on battery power
- Cape Town is due to get a ‘safe’ R14 billion Foreshore development – here’s what it could look like
- Take a Look: This Cape Town police station has been decorated with Christmas lights for the past five years