SA is stuck in a low growth trap and is at risk of another downgrade if the government doesn’t implement structural reforms, according to Moody’s vice-president and senior sovereign analyst Zuzana Brixiova. Speaking at the Moody’s summit in Johannesburg on Wednesday, Brixiova said: "Investors have such low confidence that they don’t invest because of the low growth environment." Amid fear of another downgrade, Brixiova said there were positives and negatives, but "on balance, the risks are tilted to the downside". SA could be at risk of another downgrade if the strength and independence of institutions notably diminished; if the policy framework becomes even less predictable or undermines economic or fiscal strength; and if liquidity pressures begin to re-emerge at state-owned entities (SOEs) that would elicit pronounced government intervention. Brixiova said, however, that SA’s outlook would improve if the government were to implement policies and reforms that indicated the continu...
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