South Africa: S&P Global Says South Africa’s Growth Is Improving, but There Is Still Significant ‘Slack’

Ratings firm S&P Global, one of three major credit agencies to rank SA’s debt below investment grade, says economic activity is improving faster than initially forecast, but warned that slack in the economy may restrain the recovery beyond 2021.

“South Africa’s gap with its pre-pandemic activity has narrowed faster than expected, though there is still significant slack in the economy,” ratings firm S&P Global said in its Economic Outlook for Emerging Markets.

S&P expects South Africa’s economy to grow by 4.6% this year and only 2.6% in 2022. The ratings firm’s GDP forecast is much lower than the SA Reserve Bank’s (SARB’s) recent estimate of a 5.3% expansion this year.

The difference probably stems from different views of how long the impact of the violent riots in July will last. Last Thursday the central bank said social unrest was likely to have a lasting impact on investor sentiment and activity, but that would come through later in the cycle.

S&P, on the other hand, views the impact as more immediate, but transitory.

“In South Africa, a third Covid-19 wave and riots in July weighed on growth, but the impact on activity appears to be temporary,” said analysts at the agency….


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Author : Daily Maverick

Publish date : 2021-09-30 14:15:40

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