Fitch: South Africa downgraded to BB+, oulook stable

Eren Sengezer FXStreet

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.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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