A deepening descent
Downgrade: Why SA is on the ropes
The pounding SA has taken from ratings agencies reflects the extent to which its fundamentals have deteriorated. Hope is fading that the situation can be turned around any time soon
Last Friday SA failed its fiscal fitness test. Hopes were dashed that all the ratings agencies would hold off further downgrades until the outcome of the ANC’s December elective conference. SA is considered a rubbish bet by S&P Global Ratings and Fitch, and Moody’s is a hair trigger away from concluding the same. Since 2012, SA’s credit-rating descent has been steep, mirroring the erosion of the country’s economic performance, key institutions and public finances. Having peaked four notches above junk in 2009, SA’s international ratings are now roughly back in the same position as they were in the early 1990s, all fiscal progress having been wiped out. The heart of the problem is that SA’s growth rate has been too low for too long. The country’s economic growth performance remains among the weakest of the 20 major emerging market countries, having posted negative per capita income growth for several years. Only Qatar and Venezuela are likely to show slower per capita growth this yea...
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