Fitch: South Africa downgraded to BB+, oulook stable
|Fitch Ratings just announced that South Africa’s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) has been downgraded to BB+ from BBB- and the outlook remains stable.
Key highlights
- Recent political events, including a major cabinet reshuffle, is expected to weaken standards of governance and public finances
- The replacement of the finance minister and the deputy finance minister is likely to result in a change in the direction of economic policy
- Following the government reshuffle, fiscal consolidation will be less of a priority given the president’s focus on “radical socioeconomic transformation”
- Fitch forecasts GDP growth of 1.2% in 2017 and 2.1% in 2018, but the reshuffle has raised downside risks
- Most indicators of economic development are in line with ‘BB’ category medians. GDP per capita at market prices is estimated at USD5,207 for 2016, compared with a median of USD5,007.
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