JOHANNESBURG – Ratings firm S&P Global Ratings said on Monday it does not see South Africa’s economy slipping into a recession soon but warned that economic reforms had to be implemented to avoid a downgrade in December.
S&P affirmed the investment grade rating of Africa’s most industrialised country on Friday, keeping at BBB- with a negative outlook, but lowered its economic growth estimate to 0.6 percent from 1.6 percent.
South Africa expanded by only 1.3 percent in 2015 and has seen major industries contract as a weak currency, low consumer demand and rising inflation weigh.
On Monday, the agency also said it was concerned that political upheavals could derail the economy and that it expected tensions to intensify ahead of local government elections on August 3.
“The key issue is around turning the economic growth story,” Gardner Rusike, S&P’s analyst for Africa, told a media conference call.
“The potential impact of increasing political tensions within the ruling ANC and within government can potentially derail policy implementation and the reform endeavours that have been intensified since the beginning of this year.”
President Jacob Zuma has faced increasing accusations from the opposition of mismanaging the country’s economy after he changed finance ministers twice in one week in December.(Reuters)