JOHANNESBURG, May 13 (Reuters) – Standard & Poor’s is concerned about South Africa’s dismal economic growth and its reliance on capital flows, the ratings agency’s Managing Director for sub-Saharan Africa said on Friday.
Standard & Poor’s rates Africa’s most industrialised country just one notch above sub-investment grade, and is due to make a review in June.
“When we look at our announcement from December last year what really has come to the fore more than ever before is the economic assessment and the weakness in South Africa’s economy,” Konrad Reuss said at a conference in Johannesburg.
The economy of Africa’s most industrialised country is barely growing, hobbled by power cuts last year, low commodity prices, drought and political ructions that have unnerved investors.
The economy grew 1.3 percent last year and 0.6 percent in the fourth quarter. In its February budget, the National Treasury lowered its forecast for 2016 to 0.9 percent from 1.7 percent. The International Monetary Fund has cut its outlook for 2016 to 0.6 percent.
Fellow ratings firms Moody’s and Fitch have also cited weak growth and policy upheavals as major risks to South Africa’s investment-grade rating.
Last Friday, Moody’s maintained the country’s Baa2 rating but with a negative outlook. Fitch also has the country’s debt just one notch above sub-investment grade.
