SA Risks Junk Status

On Friday, 4 December, Fitch Ratings and Standard & Poor’s cut SA’s credit rating from stable to negative (BBB-), bringing the country closer to a junk rating.

A reason for the downgrade included:

• Weakening Growth domestic product (GDP) growth performance and estimates of it weakening  further.

South Africa’s economy narrowly avoided a recession in the third quarter of 2015 with an annualised growth of 0.7% because of electricity shortages, low global demand and falling commodity prices.

Some economists now believe that the risk of a junk rating is not impossible.

Source:  Bloomberg