STILL PROBLEMS, BUT ...
SA’s credit rating: the good news
The good news is that Fitch and S&P didn’t downgrade SA again; and the really good news is that they think SA will avoid a hard landing — for now
Reading between the lines of SA’s latest credit rating reviews, there is some positive news: neither Fitch nor S&P is expecting the country to experience significant fiscal slippage or a year of negative growth over the medium term. And though the growth rate is likely to remain sluggish, neither agency is expecting SA to suffer a hard landing unless the ANC tacks left towards more populist policies. Both agencies flag the risk that economic policy could be swayed, either by the internal ANC factional battles that will play out between now and the 2019 election or by societal demands for economic emancipation. But it is not their central view that the ANC will ditch its current economic policy framework. Their base case is that SA will avoid populist solutions, stick to the expenditure ceiling, experience a gradual growth recovery (helped by cyclical factors), and escape with some moderate fiscal slippage. State-owned enterprises (SOEs) pose the biggest risk to this view, however, w...
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