Standard and Poor’s (S&P’s) was unlikely to change South Africa’s sovereign rating in the near term, the ratings agency said on Monday.
Speaking at a briefing, in Rosebank, S&P sovereign ratings senior director Christian Esters said South Africa, which currently held a BBBA- stable rating, would maintain its rating during the next update in June, and possibly over the next two years.
The nation’s key strengths, such as its institutions, which supported the rating, and vulnerabilities, including low economic growth and external imbalances, had not “really changed much”, he pointed out.
This emerged after a “surprise” uptick in gross domestic product (GDP) in the first quarter laid the basis for a cautiously optimistic outlook on the country’s 2015 growth rate, which was currently estimated at slightly north of 2%, said S&P Europe, Middle East and Africa chief economist Jean-Michel Six.
South Africa was also likely to see a gradual acceleration in growth over the next two years, he believed.
However, Esters noted that the country’s risks remained that of public sector wages, the negotiations for which were currently under way, and an electricity drag, which would shave 0.3% from South Africa’s GDP growth rate for 2015, as well as that of how the current account would be funded.