The Economy Who will rate the raters?
A bit of good news this week to temper the interest rate hike: S&P have affirmed our long-term foreign and local currency debt ratings at BB and BB+ respectively, and maintained their stable outlook – this despite our weak economic growth and the high contingent liabilities which press upon our fiscal prospects. This outlook, say S&P, is based on their belief that “the South African government will pursue a range of economic, social, and fiscal reforms, albeit over an extended period of time.” In the meantime, the prospect of a return to growth in the third quarter remains likely, as indicated by a range of factors – the end of the drought in the farmlands of the Cape, a favourable ratio between the long-term and short-term interest rates, and expected improvements in a range of sectors, including manufacturing, electricity production and – especially – wholesale and retail trade.
Comment: Our political miracle, while precipitous in the end, was decades in the making. If an economic miracle is to come, it is going to take time.