https://www.polity.org.za
Deepening Democracy through Access to Information
Home / News / South African News RSS ← Back
Close

Email this article

separate emails by commas, maximum limit of 4 addresses

Verification Image. Please refresh the page if you cannot see this image.

Sponsored by

Close

Article Enquiry

South Africa faces weak long-term growth outlook and rising debt – Moody's

Verification Image. Please refresh the page if you cannot see this image.
Close

Embed Video

South Africa faces weak long-term growth outlook and rising debt – Moody's

Photo by Reuters

16th May 2019

By: African News Agency

SAVE THIS ARTICLE      EMAIL THIS ARTICLE

Font size: -+

South Africa's new government faces significant challenges in raising growth, stabilising debt, and strengthening state-owned enterprises and institutions, Moody's Investors Service has said.

Moody's, the only one out of the three major ratings agencies that still has South Africa's credit standing at investment grade, said its economic growth would remain one of the lowest among Baa3-rated sovereigns.

Advertisement

After his ruling ANC retained power at last week's general elections, albeit with a reduced majority, President Cyril Ramaphosa is putting together a new cabinet that must pursue policies that kickstart the stuttering economy and help create new jobs in a country grappling with 27.6% unemployment.

The National Treasury has forecast lethargic gross domestic product (GDP) expansion of 1.5% in 2019 compared with 0.8% last year. The budget deficit is expected to widen to 4.5% of GDP in the 2019/20 fiscal year from 4.2% in 2018/19, due to weak economic growth and tax revenue.

Advertisement

"While South Africa has strengths, including a favourable government debt structure and a large pool of domestic investors, in the absence of effective policy change, the sovereign's credit profile will most likely continue to erode, with fiscal strength weakening and growth remaining low," said Lucie Villa, a Moody's vice president and co-author of the report.

"Fading prospects of policies that will sustain fiscal and economic strength, alongside any signs of diminishing resilience to shocks, would put downward pressure on the country's rating."

Moody's said one of the main challenges of the new government would be to arrest and potentially reverse the long-term decline in South Africa's growth potential. Given the difficulty of the task, it said structurally low growth would continue to weigh on the country's economic strength in the next few years.

The new administration would also face the challenging task of arresting and ultimately reversing the rising debt trend, Moody's added, noting that the government debt burden was expected to rise to 65% of GDP by 2023, or over 70% including guarantees to cash strapped state power utility Eskom.

EMAIL THIS ARTICLE      SAVE THIS ARTICLE

To subscribe email subscriptions@creamermedia.co.za or click here
To advertise email advertising@creamermedia.co.za or click here

Comment Guidelines

About

Polity.org.za is a product of Creamer Media.
www.creamermedia.co.za

Other Creamer Media Products include:
Engineering News
Mining Weekly
Research Channel Africa

Read more

Subscriptions

We offer a variety of subscriptions to our Magazine, Website, PDF Reports and our photo library.

Subscriptions are available via the Creamer Media Store.

View store

Advertise

Advertising on Polity.org.za is an effective way to build and consolidate a company's profile among clients and prospective clients. Email advertising@creamermedia.co.za

View options
Free daily email newsletter Register Now