Fitch: South Africa downgraded to BB+, oulook stable

Fitch Ratings just announced that South Africa’s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) has been downgraded to BB+ from BBB- and the outlook remains stable.

Key highlights

• Recent political events, including a major cabinet reshuffle, is expected to weaken standards of governance and public finances
• The replacement of the finance minister and the deputy finance minister is likely to result in a change in the direction of economic policy
• Following the government reshuffle, fiscal consolidation will be less of a priority given the president’s focus on “radical socioeconomic transformation”
• Fitch forecasts GDP growth of 1.2% in 2017 and 2.1% in 2018, but the reshuffle has raised downside risks
• Most indicators of economic development are in line with ‘BB’ category medians. GDP per capita at market prices is estimated at USD5,207 for 2016, compared with a median of USD5,007.