Moody’s sees South Africa’s growth outlook remaining weak

Moody’s Investors Service said South Africa’s long-term growth outlook remained weak with the country’s fiscal strength eroding, but that a proven resilience to absorbing financing shocks still supported the economy’s credit profile.

“South Africa has strengths including a favorable government debt structure, a large pool of domestic investors and a diversified economy that insulate its credit profile from shocks and provide some time for policies to emerge that will address those challenges,” the credit rating company said in an emailed report. “However, in the absence of effective policy change, the sovereign’s credit profile will most likely continue to erode, with fiscal strength weakening and growth remaining low.”

Moody’s added that fading prospects of policies that will sustain fiscal and economic strength, alongside any signs of diminishing resilience to shocks, would put downward pressure on the country’s rating.

South Africa’s foreign debt is already rated junk by S&P Global Ratings and Fitch Ratings, and its one remaining investment-grade assessment at Moody’s depends on how the government approaches the fiscal deficit and financial troubles of state-owned companies now that the national election is over and Cyril Ramaphosa will continue his presidency.

© 2019 Bloomberg L.P

Source: moneyweb.co.za