SA's credit rating slashed
Rating agency Fitch has cut South Africa’s sovereign credit rating by one notch, taking it down to BBB – the lowest investment grade category, one notch above "junk". This follows Standard & Poor’s (S&P) changing of the outlook earlier this year, from stable to negative. Moody’s assigns SA a similar rating.
South Africa's slowing economy and mounting debt have been cited as reasons for these changes.
Fitch reduced its 2015 growth forecast from 2.1% to 1.4%, and furthermore lowered the projection for 2016 to 1.7% from 2.3%. Fitch said in a statement:
"While growth is expected to accelerate to 2.4% in 2017, it will remain well below the country's growth trend before 2008 of around 4% and the NDP target of 5%."
S&P said that it anticipates GDP growth next year to linger at around 1.6%, only passing the 2% threshold from 2017 onwards. S&P said in a statement:
"The negative outlook reflects our view that GDP growth might be lower than we currently expect, or that fiscal flexibility might reduce owing to contingency risks from state-owned entities with weak balance sheets."
In October this year, the National Treasury cut its economic growth forecast for 2015 to 1.5%, down from a previously predicted 2%. The Treasury has yet to release official comment on S&P's cut.