Last week closed with rating agency Standard and Poor’s (S&P) announcement to keep South Africa’s foreign credit rating unchanged, reinforcing the current BBB- rating with a negative outlook. On Wednesday this week, peer agency Fitch, followed suit maintaining its BBB- rating with a stable outlook. Both agencies highlighted similar viewpoints: increased political tension poses a threat, slow growth remains worrisome and both would like to see the effect of the policy measures the government will be implementing to address the structural issues.
Both Fitch and S&P predict that the local economy will have pedestrian growth in 2016, forecasting 0.7 percent and 0.6 percent respectively. The forecast was optimistic, considering that moments before the Fitch announcement, Stats SA announced that the economy shrunk by 1.2 percent in the first quarter of 2016.
Mining and quarrying declined by 18.1 percent and agriculture, forestry and fishing declined by 6.5 percent recording its fifth consecutive drop. Real estate, finance and business services on the other hand, added value to the economy.