Today ratings agency Standard and Poor (S&P) will decide whether or not to downgrade South Africa’s sovereign foreign credit rating. South Africa received its first downgrade from S&P in 2011 and again in June 2014, with the latter downgrade motivated by labour issues and failure to show economic growth at the time.
In this review S&P has turned their focus to the current economic growth, political stability and structural reform on state owned enterprises. To hold off the downgrade, S&P will need to be convinced that the government has taken the needed steps to address these issues.
However, even if S&P decides not to downgrade South Africa today, it will merely shift the inevitable downgrade to December 2016.