The South African government faces a continued deterioration in fiscal strength, structurally very weak growth and a debt burden that is set to rise even faster and to higher levels than we had previously expected.  The unprecedented deterioration in the global economic outlook caused by the rapid spread of the coronavirus outbreak will further exacerbate South Africa’s challenges.

Prolonged risk aversion and capital outflows triggered by the coronavirus outbreak and sharp commodity price declines will exacerbate credit weaknesses in some low-rated, emerging market sovereigns. Those that need to access international bond markets to refinance their foreign-currency debt or that borrow heavily from private sector lenders in foreign currency are most vulnerable.

The economic and trade disruption caused by the coronavirus outbreak is spreading from the APAC region to the rest of the world.  View Moody's latest analysis on our specially created topic page. 

Corporate defaults are likely to climb as the coronavirus outbreak continues and oil prices remain low. Under a scenario of a sharp-but-short economic downturn, we project the trailing 12-month global speculative-grade default rate will climb to 6.8% in one year. In the event of a recession similar to the global financial crisis, our scenario analysis projects a default rate of 16.1%.