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It is with concern that SACCI noted the change in the ratings outlook from stable to negative by Fitch Ratings agency. While the agency affirmed the long term foreign and local currency credit rating of the Republic of South Africa at ‘BBB+’ and ‘A’ respectively, the change in outlook mirrors the decision of Moody’s Investor Services in November last year to maintain South Africa’s A3 investment grade rating, while revising their outlook downward.

The affirmation of the investment grade rating is heartening if the current global economic climate is taken into account since events playing out in South Africa’s main trading partners impact on the current economic conditions.

Despite a clear commitment by the Treasury to change the composition of expenditure away from consumption, the strong rigidities in the labour market contribute to jobless growth. The latter increases the pressure on social spending and grants.

To address these concerns, South Africa needs to increase the rate of investment, savings and job creation. It is also paramount that economic policies be transparent, predictable, consistent with future debt sustainability and supportive of business growth.