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JOHANNESBURG, June 19 The steep decline in South
Africa's business confidence is a setback to economic growth
recovery and will dampen investment, ratings agency Moody's said
on Monday, after Africa's most industrialised economy slumped to
South African business confidence fell in the second quarter
to a level not seen since the 2009 recession, a survey showed
last week, as concerns over politics weighed.
"Reduced business confidence implies reduced investment,
which would negatively affect growth in South Africa’s
already-weak economy, and will ultimately make fiscal
consolidation more challenging," Moody's senior analyst Zuzana
Brixiova said in a research note.
"Without improved trust in policymaking, it is likely that
South Africa will remain in a low-growth trap," Brixiova said.
South Africa entered recession for the first time in eight
years in the first quarter, data showed on June 6, putting
pressure on the government just as it must cope with credit
Moody's lowered South Africa's rating to the bottom of the
investment grade table with a negative outlook on June 9, citing
a recent abrupt cabinet reshuffle and reduced growth prospects
for the economy.
S&P Global Ratings and Fitch rate South Africa as "junk".
Finance Minister Malusi Gigaba said on Thursday the Treasury
was looking for ways to cut government spending further and
reallocate funds to help boost growth while maintaining its
(Reporting by Olivia Kumwenda-Mtambo; Editing by James